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North Carolina economic index : a summary of North Carolina's economic strengths, challenges and opportunities

North Carolina economic index : a summary of North Carolina's economic strengths, challenges and opportunities

A Division of
The North Carolina Department of Commerce
P
S t r a t e g i c P l a n n i n g R
OLICY
& ESEARCH
2011 North Carolina
Economic Index
A Summary of North Carolina's Economic
Strengths, Challenges and Opportunities
Includes an overview of the recent economic recession
2011
North Carolina
Economic Index
Economic Index Report Staff
Meihui Bodane
Kristin Bunn
Michael Haley
Aubrey Incorvaia
Anna Lea
Yongjun Lei
Tammy Lester
Derek Ramirez
Christa Wagner Vinson
Jared Wiener
Report Authors
Kristin Bunn
Derek Ramirez
Report Editor
Jared Wiener
Direct questions or comments to:
Jared Wiener, Senior Economist
North Carolina Department of Commerce
Division of Policy Research and Strategic Planning
301 North Wilmington Street
4329 Mail Service Center | Raleigh, NC 27699-4329
Phone: (919)715-4199 | jwiener@nccommerce.com
Special thanks to Angela Marshall, Whitney Phillips and Roberta Rose
for the design and layout of this document.
June 2011
June 2011
Dear Economic Development Allies:
The North Carolina Department of Commerce believes long-term economic development is
predicated on the implementation of a set of strategies to develop North Carolina’s capacity
for sustained economic growth. The 2011 North Carolina Economic Index is a tool designed to
assist state leaders and economic development professionals with identifying, understanding
and capitalizing on North Carolina’s strengths, addressing its weaknesses, and developing
future economic opportunities.
The Index provides a detailed and objective snapshot of the state’s economy based on
16 indicators and 53 specifi c measures. Using the most recent available data at time of
publication, the report focuses on North Carolina’s performance against six comparison states
(Georgia, Massachusetts, Michigan, Pennsylvania, South Carolina and Virginia) and the United
States as a whole. Additionally, many indicators and measures provide data for the different
regions of the state.
In addition to specifi c economic data, the report provides information on how indicator results
may guide state economic development planning. The report’s policy implications serve as
a call to action for economic development professionals and policymakers throughout North
Carolina. The Index also provides an overview of key economic trends by showing changes
over fi ve years. Finally, the Index explores the recession’s impacts on North Carolina’s
economy and how it has affected trends within the State.
J. Keith Crisco
Secretary
Dale Carroll
Deputy Secretary
Stephanie McGarrah
Assistant Secretary
Policy, Research, and Strategic Planning Division
TABLE OF CONTENTS Economic Structure
EXECUTIVE SUMMARY .............................................................................. 1
OVERVIEW OF THE RECENT
ECONOMIC RECESSION ........................................................................... 5
Indicator 1: Population ................................................................................11
Indicator 2: Labor Force ...............................................................................14
Indicator 3: Industry Mix ..............................................................................18
Indicator 4: Occupational Mix .....................................................................21
Indicator 5: State Gross Domestic Product (GDP) .....................................25
Indicator 6: Labor Productivity ....................................................................28
Indicator 7: Energy .......................................................................................31
Indicator 8: Exports ......................................................................................34
Indicator 9: Foreign Direct Investment (FDI) ..............................................38
Indicator 10: Firm Growth ............................................................................41
Indicator 11: Research and Development (R&D) .......................................44
Indicator 12: Entrepreneurial and Small Business Capital .......................47
Indicator 13: Educational Attainment .........................................................50
Indicator 14: Earnings .................................................................................53
Indicator 15: Income Distribution ...............................................................56
Indicator 16: Healthcare Access and Cost .................................................58
SOURCES GUIDE ......................................................................................64
TABLE AND FIGURES
1-1 Population Growth, 2005-2010 .....................................................................................11
1-2 County Population Change by NC Economic Development Regions, 2000-2009 .....12
1-3 Percent of Population by Age Group, 2009 ...................................................................13
2-1 Growth in Labor Force and Employment, 2005-2010 ..................................................14
2-2 Labor Force Participation Rates, 2005 & 2010 ...........................................................15
2-3 Female Share of Employment, 2005 & 2009 ..............................................................16
2-4 Labor Force Participation Rate in North Carolina
by Age Group, 2000, 2005, & 2010 ..............................................................................17
3-1 Industry Type ...................................................................................................................18
3-2 North Carolina Employment by Industry Sector, 2005 & 2010 ...................................19
3-3 Change in the Manufacturing Industry 2005 - 2010 ...................................................20
4-1 Top Employed Occupations in North Carolina, 2010....................................................21
4-2 Top Earning Occupations in North Carolina, 2010 .......................................................22
4-3 Management, Professinal and Technical Occupations by North Carolina
Economic Development Region .....................................................................................23
4-4 Top 5 Growing Occupations by Economic Development Region, 2005-2010 ............24
5-1 Export Dollar Value, 2005 & 2010 ................................................................................25
5-2 NC Top Export Destinations Percentage Growth 2005-2010 ......................................26
5-3 North Carolina Top Ten Exports, 2005 & 2010 ...........................................................27
6-1 Average Industrial Price of Electricity, cents per KWh, 2004-2009 ............................29
6-2 Precent Generation in MW h Renewable Energy with
Hydroelectric Production, 2005 & 2009 .......................................................................29
6-3 Percent of State Renewable Portfolio by Energy Type, 2009 .......................................30
7-1 Dollar Value of FDI, 2002 & 2007 .................................................................................31
7-2 FDI in North Carolina by Country, 2007 ........................................................................32
7-3 Employment by Foreign Own Companies, 2003 & 2008 ............................................33
8-1 R&D Intensity by State ....................................................................................................34
8-2 Federal R&D Obligations in North Carolina, by Selected Agency; FY 2010 ................35
8-3 Federal Defense Contracts in R&D by County in North Carolina; FY 2010 .................36
8-4 R&D expenditures at North Carolina Academic Instututions, 2009 ...........................36
9-1 NC Percent of Venture Capital by Stage of Development ............................................38
9-2 Venture Capital Funds and Number of Deals, by Select State ....................................39
9-3 SBIR/STTR Awards by State 2005-2010 .......................................................................40
10-1 Educational Attainment by Degree Category, 2009 .....................................................41
Economic Structure
10-2 Percent Change in Educational Attainment, 2000-2009 ............................................42
10-3 Science & Engineering Degrees per 10,000 Population, 2008-2009........................43
11-1 Percent Change in Real GDP and Real GDP Per Capita, 2004-2009 .........................44
11-2 Per Capita Real GDP, 2004 & 2009 ..............................................................................45
11-3 Top Ten Industries Contributing to North Carolina’s GDP, 2009 .................................46
12-1 Labor Productivity, 2004 & 2009 ..................................................................................47
12-2 Percent Change in Labor Productivity, 2004-2009 ......................................................48
12-3 North Carolina Labor Productivity Growth and Components
by Select Industries 2004 - 2009 ..................................................................................48
13-1 Percent Change in Firms, By State 2005-2009 ............................................................51
13-2 Firms by Economic Development Region ......................................................................52
14-1 Median Household Income, 2004 & 2009 ...................................................................53
14-2 Median earnings in the Past 12 Months of Full-Time Year-Round Workers
16 and Older in 2009 .....................................................................................................54
14-3 Average Weekly Wage, Private Sector, 2005 & 2010 ..................................................55
15-1 Percent of Tax Returns by Income Category, 2008 ......................................................56
15-2 North Carolina Precent of Total State Adjusted Gross Income Returns
Attributed to Income Category, 2004 ............................................................................56
15-3 North Carolina Percent of Total State Adjusted Gross Income Returns
Attributed to Income Category, 2008 ...........................................................................56
15-4 Project Per Capita Income in NC Counties ....................................................................57
16-1 2010 North Carolina Mortality Rankings, by County ....................................................59
16-2 Average Percent of Persons Under 65 Years of Age Not Covered
by Health Insurance, 1999-2009 .................................................................................60
16-3 Percent of North Carolinians Under 65 Years of Age Not Covered
by Health Insurance, 1999-2009 ..................................................................................60
16-4 Percent of Private Sector Establishments That Offer Health Insurance
to Employees, by Firm Size, 2009 .................................................................................61
16-5 North carolina Health Insurance Premiums, by Firm Size
(Number of Employees), 2009 .......................................................................................62
16-6 Percent of North Carolina Private-Sector Establishments that Offer
Health Insurance by Firm Size, 2000 versus 2009 .....................................................62
TABLE AND FIGURES
1
EXECUTIVE SUMMARY A summary of North Carolina’s Economic
strengths, challenges, and opportunities
WHAT IS THE 2011 NORTH CAROLINA ECONOMIC INDEX?
The 2011 North Carolina Economic Index is a tool created to assist the State’s economic development leaders in
capitalizing on North Carolina’s economic strengths and addressing its weaknesses. The Index provides a snapshot of
how the state is performing based on 16 economic indicators and 53 specifi c measures. Using the most current data
available at the time of publication, the indicators track North Carolina’s performance over time to provide an objective,
long-term evaluation of the State’s economy. North Carolina is compared to six states (Georgia, Massachusetts, Michigan,
Pennsylvania, South Carolina and Virginia) and the United States as a whole. Comparison states were selected based on
the following characteristics: Georgia, South Carolina and Virginia represent Southeastern geographic competitor states;
Michigan and Pennsylvania are comparable manufacturing states; and Massachusetts is a leading technology state.
The Index also includes an analysis section on the impact of the recent recession on North Carolina workers, businesses,
industries and families. Key measures evaluated include: state and national unemployment rate; county unemployment;
industry employment; foreclosures; and home sales. In this section, each measure analyzes data from December 2007,
the offi cial start of the recession, to the latest month data is available, January 2011. Even though the national recession
offi cially ended in June 2009, it’s impacts are still being felt.
SUMMARY OF INDICATOR FINDINGS
The 16 economic indicators fall into six broad economic categories: Demographic Change; Transitioning Economy;
Productivity; Global Economy; Innovation; and Shared Prosperity. Highlighting the complex and interrelated nature of the
State’s economy, many of the indicators could easily fall into several of the categories. Each category plays a prominent
role in North Carolina’s economy and affects almost every economic outcome. Together, the indicators form a broad
foundation for understanding North Carolina’s economic strengths, weaknesses, challenges and opportunities.
Demographic Change: Many economic indicators, such as unemployment rates or output growth, are hard to predict
in the long-term. Demographic developments are different. Although demographic surprises occur, major trends tend to
build slowly and are discernible in advance.1 North Carolina’s changing demographic landscape is no exception. As North
Carolina experiences demographic change, economic development professionals will need to ensure that the state labor
force has the right mix of skills, appropriate business and social services are available, and necessary infrastructure such
as roads, utilities, and schools are in place.
• North Carolina is the 10th largest state. North Carolina currently ranks as the 10th largest state in the country with
a population of 9,535,483 according to the 2010 U.S. Census. Since the 2000 Census, the State experienced a
population growth of over 18 percent. A major reason for the State’s population growth is the signifi cant increase in
people migrating from other regions of the United States or foreign countries.
• U.S. and North Carolina labor force has declined since 2005. Since 2005 the Nation has experienced a decline
in the labor force. Similarly, North Carolina’s labor force has declined by 2.1 percent between 2005 and 2010.
Nearly 58 percent of North Carolina’s population is between the ages of 20 and 64, and workers aged 55 and
above constitute a growing segment of the workforce. On January 1st of 2011, the oldest of the Baby Boomer
generation began turning 65.2 Every day since then and for the next 19 years, about 10,000 more people will turn
65. This segment of the population is also increasingly visible in the workforce, boosting their labor force
participation rate from 33.6 percent in 2000 to 38.2 percent in 2010.
Transitioning Economy: North Carolina’s economy is transitioning from traditional labor-intensive industries (e.g. textiles,
furniture, etc.) to knowledge-based or service-related industries. While this transition is not new, the recession has served
to accelerate the transformation. The transition of North Carolina’s economy suggests the need to continue workforce
training and redevelopment opportunities for displaced manufacturing workers. Employment trends should be used to
gauge which industries are growing or contracting and to determine resource allocation for infrastructure improvements,
workforce development, and may be used for developing targeted economic incentives.
1 Little, Jane Sneddon and Triest, Robert K. “Seismic Shifts: The Economic Impact of Demographic Change. An Overview.” Federal Reserve Bank of Boston, Conference
Series 46. June 2001.
2 Passel, Jeffrey and D’Vera Cohn. (2008). Baby Boomers Approach Age 65 – Glumly: Survey Findings About America’s Largest Generation [Executive Summary].
Pew Research Institute. http://pewresearch.org/pubs/1834/baby-boomers-old-age-downbeat-pessimism
2
EXECUTIVE SUMMARY
• North Carolina employment is concentrated in four industries. Ranked by employment size, North Carolina’s four
largest industries are: government; health care and social assistance; retail trade; and manufacturing. These industries
account for more than 55 percent of employment in the State. Like most of the country, employment in manufacturing
is signifi cantly declining. The manufacturing industry has lost over 137,000 workers since 2005.
• Occupations with the most workers often pay low wages. The top fi ve North Carolina occupations in terms of
employment are: offi ce and administrative support; sales; food preparation and serving; production; and transportation
and materials moving. Each of these occupations earns less than $31,000 annually. While managerial, professional
and technical occupations in the state are growing signifi cantly, the vast majority of these jobs are located in North
Carolina’s urban regions.
• Health care occupations are growing across North Carolina. All seven of the State’s economic development regions
are experiencing signifi cant growth in community and social services occupations, health care support occupations,
and health care practitioners and technical occupations.
Productivity: Productivity represents the amount of output per unit of input. In general, as labor productivity increases
output grows. It also provides a direct measure of a state’s competitive position over time. State output, measured by
real gross domestic product (Real GDP), is the monetary value of all goods and services performed in a state adjusted for
infl ation. A productive labor force and an effi cient energy system are two key factors in North Carolina’s ability to sustain
economic output and promote future growth. New economic development projects, the expansion of existing businesses,
and increased production are impacted by the cost, availability and reliability of energy.
• North Carolina’s Real GDP grew faster than U.S. North Carolina’s Real GDP growth rate between 2004 and 2009
exceeds that of the Nation and all comparison states except Virginia. The government was the leading contributor
to the State’s Real GDP in 2009, followed closely by fi nance and insurance, real estate and rental and leasing, and
nondurable goods manufacturing.
• North Carolina labor productivity is growing faster than U.S. The State’s labor productivity is growing faster than the
U.S. average. North Carolina’s growth in labor productivity is driven by a variety of industry sectors across different
segments of the economy. Innovation and technology are key determinates of labor productivity growth.
• North Carolina continues to be a leader in competitive industrial electricity prices. However, to remain competitive,
North Carolina must continue to invest in new, effi cient energy sources. To this end, North Carolina has enacted a
Renewable and Effi ciency Portfolio Standard (REPS). In 2009 North Carolina’s percent renewable production, including
hydroelectric, was below the national average but above all competitor states except Massachusetts.
Global Economy: An important indicator of economic health is the degree to which a state is engaged in the global
economy. Globalization will only increase in the foreseeable future, so economic development professionals should
work to ensure North Carolina continues to engage in the global economy. North Carolina’s long-term economic
growth depends on expanding and diversifying exported industry sectors. The State’s ability to compete for national
and international export markets is critical for the retention and growth of employment opportunities. Foreign direct
investment (FDI) is an important indicator of a state’s ability to attract foreign investors and is one of the key determinates
of a region’s ability to attract new technologies, capital, workforce skills, global connections and job opportunities.
• North Carolina’s dollar value of exports continues to grow. Canada remains the State’s top export destination, but
exports to China are experiencing the most growth. North Carolina’s top two export commodities are chemicals and
machinery.
• Foreign direct investment has increased. FDI infl ows to North Carolina grew 5.9 percent from 2006 to 2007. The vast
majority of FDI in the State comes from Europe. Asian countries are also very interested in North Carolina, with Japan
topping the list in FDI. Approximately 206,000 workers in North Carolina are employed by foreign owned companies.
A summary of North Carolina’s Economic
strengths, challenges, and opportunities
3
EXECUTIVE SUMMARY
Innovation: The creation and adoption of new products, services and business models is a fundamental driver of the
State’s economic and social prosperity in the 21st century. A vibrant entrepreneurial economy is typically characterized
by a high rate of business turnover, including both fi rm openings and closings. Investments in research and development
(R&D) increase productivity, boost economic growth, generate new products and processes, and improve the quality of
people’s lives. Available venture capital to companies is a predictor of potential new products and services, job creation
and revenue growth in a state.
• Amount of venture capital in North Carolina is increasing. North Carolina’s share of national venture capital increased
from 1.3 percent in 2009 to 2.1 percent in 2010.
• Education services sector had high number of fi rms. Looking at fi rms of all sizes and all ages, North Carolina’s
economic sector with the most fi rms in 2008 was the Education Services industry sector, with 15 percent of the total
share of fi rms.
• Academic R&D is concentrated in Research Triangle. Academic R&D, a critical innovation input and one of the State’s
competitive advantages, is highly concentrated in the Research Triangle Regional Partnership (RTRP) region. In 2009,
the three largest universities located in the Research Triangle area – UNC-Chapel Hill, Duke University, and North
Carolina State University – accounted for over $1.8 billion, or 85 percent, in academic R&D expenditures within
North Carolina.
• Several counties received large amounts of DOD contracts. Ten North Carolina counties received in excess of
$1 million dollars in federal R&D contracts from the Department of Defense in 2010.
Shared Prosperity: North Carolina’s economic transformation has brought many benefi ts to the State — new jobs and
opportunities, international recognition as a business location, and rapid population growth — but it has not been painless
and many successes have not been widely - shared. Healthy economies generate opportunities for individuals and
households to increase incomes. As the State continues its economic transition, economic development leaders must
continue to focus on expanding high wage industries and dedicate resources to provide training opportunities and improve
the education levels of the labor force for people across North Carolina.
• Percent of North Carolina population with bachelor’s degree or higher is increasing faster than U.S. The State is
improving faster than the national average in the percent of the population 25 years of age or more (25+) having a
bachelor’s degree or higher education. However, North Carolina was equal to the national average with 43 percent
of the State’s citizens not pursuing formal education beyond high school.
• North Carolina’s median household income is 84 percent of U.S. average. North Carolina’s median household income
is the second lowest among the comparison states. The State’s urban economic development regions (Research
Triangle, Charlotte, and Piedmont Triad) have the highest average weekly wages.
• Per capital income differs for rural and urban areas. Per capita income across counties shows relatively stark
differences between rural and urban parts of North Carolina. Mecklenburg, Wake and Orange counties have the
highest concentration of wealth.
• Many North Carolinians do not have health insurance. Nearly 18 percent of North Carolinians less than 65 years of
age were not covered by health insurance between 1999 and 2009. In 2009 only 54 percent of businesses with fewer
than 100 employees offered health insurance to their employees in North Carolina.
A summary of North Carolina’s Economic
strengths, challenges, and opportunities
4
CONCLUSION
Economic development is a long term investment in the future of North Carolina. In the short-term, the State faces a set
of historical economic challenges the Department of Commerce and the economic development community must move
to address. However, to remain competitive, North Carolina must not lose sight of its long-term strengths, challenges and
opportunities. The State continues to attract people and businesses, and the productivity of its labor force continues
to improve. North Carolina’s economic success is evident in the increase of the State’s Real Gross Domestic Product,
its ability to create new fi rms (small and large) and its expanding export market. These successes are signifi cant, but
challenges remain. Despite signifi cant historical investment in education, North Carolina must continue to strengthen
its “human capital” through basic education and workforce development. Also, economic opportunity for all North
Carolinians, regardless of income level or geographic location, should continue to be an essential goal of the State’s
economic development policy. This Index can be used to help North Carolina’s economic development leaders make policy
and resource allocation decisions to leverage the State’s successes and mitigate its challenges.
EXECUTIVE SUMMARY
5
Similar to the global and national economies, North Carolina is recovering from a recession. According to the National
Bureau of Economic Research, the United States entered a recession in December 2007. Employment numbers suggest
North Carolina followed in February 2008. Employment and production continued to fall throughout 2008 and 2009.
In late 2009 the economy started to stabilize and begin a slow recovery with the offi cial end of the national recession
being June 2009. The end of the recession marks the low point in the economic decline, it does not mark a return to
pre-recession economic levels. According to several key economic indicators, the economy is showing signs of returning
to pre-recession levels, but the path will be long. The following overview analyzes the impact of the recent recession on
unemployment rates, industry employment trends, state employment trends, household fi nances, and the housing market.
UNEMPLOYMENT RATES AND INDUSTRY EMPLOYMENT TRENDS
After the recession started in December 2007, North Carolina’s unemployment rate jumped from 5.0 percent to a high
of 11.4 percent on a seasonally adjusted basis in February 2010. Over the same time period, the Nation’s unemployment
rate increased from 5.0 percent to 10.1 percent.
North Carolina’s unemployment rate started to fall after February 2010 to the current level of 9.7 percent (March 2011).
The drop in the unemployment rate of 1.7 percentage points is signifi cant, but the largest contributing factor was the
shrinking of the labor force, not the employment of additional workers. While employment has increased by 6,200 during
this time, the labor force (people working or actively looking for work) has decreased by nearly 79,000. The magnitude of
the labor force reduction far exceeds that of employment increases. These two factors have worked together to reduce
the number of people considered unemployed by 85,000. As public perception of the job market improves, the size of the
labor force will likely increase as more people begin to actively look for jobs. In general, this infl ux is likely to increase not
only the size of the labor force but also the number of people considered unemployed. Therefore, improvement in the job
market may correspond with a temporarily static or even increasing unemployment rate.
OVERVIEW OF THE RECENT ECONOMIC RECESSION
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
U.S.
N.C.
Dec. 07
Mar. 08
Jun. 08
Sep. 08
Dec. 08
Mar. 09
Jun. 09
Sep. 09
Dec. 09
Mar. 10
Jun. 10
Sep. 10
Dec. 10
Mar. 11
N.C. Employment Security Commission
Unemployment Rate, Dec. 2007 - Jan. 2011
6
OVERVIEW OF THE RECENT ECONOMIC RECESSION
In addition to considering the size of the labor force with the traditional unemployment rate, an alternative measure
of unemployment exists. This measure captures more than people working and those actively searching for work. An
alternative unemployment rate3 can be used that includes both marginally attached workers and workers who work part-time
for economic reasons. Marginally attached workers are workers that have looked for employment in the last 12
months, but haven’t searched for work in the last 4 weeks. Workers that work part-time for economic reasons are workers
that are working less than 35 hours a week and desire full time employment, but cannot fi nd full time employment. The
graph below shows the U6 unemployment rate for North Carolina from 2004 to 2010. Note that the U6 unemployment
rate has not experienced the same decline seen in the “regular” unemployment rate from 2009 to 2010. All years
comprised of the average of the previous four quarters.
3 The alternative unemployment used in this analysis is more formally known as U6, calculated by the Bureau of Labor Statistics on a quarterly basis.
2004
2005
2006
2007
2008
2009
2010
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Alternative Unemployment Rate
U.S. Bureau of Labor Statistics
North Carolina Alternative Unemployment Rate,
2004 -2010
7
Employment impacts related to the current recession are not equally distributed among all industries.4 However,
job losses are occurring in both traditional and knowledge-based sectors. According to the following table, nonfarm
employment5 in North Carolina decreased 7.4 percent (-308,100 jobs) between December 2007 and January 2011.
Nearly a third (99,300) of the nonfarm jobs lost since December 2007 were in the Manufacturing industry. Only
Government and Education & Health Services have added employment since the start of the recession. In the last four
months industry employment has shown improvement with 4 sectors adding a total of 16,000 jobs.
Since the start of the recession, three industry sectors accounted for nearly 80% of the job loss by sector in North
Carolina: Manufacturing (-99,300); Construction (-85,900); and Trade, Transportation and Utilities (-60,300). Industries
that experienced modest employment losses (between 5,000 and 20,000) include Other Services, Professional and
Business Services, Leisure and Hospitality, and Financial Activities. Education & Health Services and Government both
experienced slight employment growth. However, over the last four months these two sectors have experienced the
largest job losses, -11,100 and -31,500 respectively.
4 Industry employment data from the U.S. BLS is considered total employment (full, part time, and temporary).
5 Total number of paid workers of any business, excluding the following employees: proprietors, the unincorporated self-employed, unpaid volunteer or family workers,
farm workers, and domestic workers. Government employment covers only civilian employees; military personnel are excluded. The total non-farm payroll accounts for
approximately 80% of the workers who produce the entire gross domestic product of the United States. (U.S. BLS)
Industry Sectors Jan. 11
Employment
Since Start of Recession
(12/07 - 01/11)
Last 4 Months
(09/10 - 01/11)
Change % Change Change % Change
Mining & Logging 5,700 (1,200) -17.4% (200) -3.4%
Construction 165,800 (85,900) -34.1% (5,500) -3.2%
Manufacturing 433,100 (99,300) -18.7% 500 0.1%
Trade, Transportation, & Utilities 719,800 (60,300) -7.7% 5,700 0.8%
Information 68,000 (4,200) -5.8% (3,200) -4.5%
Financial Activities 202,100 (10,100) -4.8% 2,800 1.4%
Professional & Business Services 489,000 (17,600) -3.5% 7,600 1.6%
Education & Health Services 533,600 800 0.2% (11,100) -2.0%
Leisure & Hospitality 390,900 (14,200) -3.5% (3,000) -0.8%
Other Services 156,900 (18,600) -10.6% (2,400) -1.5%
Government 696,500 2,500 0.4% (31,500) -4.3%
Total Nonfarm Employment 3,861,400 (308,100) -7.4% (40,300) -1.0%
OVERVIEW OF THE RECENT ECONOMIC RECESSION
U.S. Bureau of Labor Statistics
North Carolina Nonfarm Employment Trends by Industry
8
OVERVIEW OF THE RECENT ECONOMIC RECESSION
OVERALL STATE AND LOCAL EMPLOYMENT
An analysis of employment by industry sector excludes a signifi cant portion of the population - such as proprietors,
unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers, who are not
included in the sector employment count. To give a full overview of state and local employment, this section examines
the total number of people employed in the State of North Carolina. From December 2007 to January 2011 more
than 309,000 people lost their jobs. Most of job loss occurred between December 2007 and December 2009. Since
December 2009 employment has slowly increased. The largest employment increase since the onset of the recession
peaked in April 2010 and was the result of hiring temporary workers for the 2010 Census.
In many communities across the State, workers continue to struggle to fi nd jobs. In January 2011, the 12 month average
unemployment rate for each county in North Carolina was an average of 5.4 percentage points higher than it was in
December 2007 at the start of the recession. This does not count “discouraged” workers who want jobs, but have not
looked for employment in the last 4 weeks.
Dec. 07
Apr. 08
Aug. 08
Dec. 08
Apr. 09
Aug. 09
Dec. 09
Apr. 10
Aug. 10
Dec. 10
4,400,000
4,350,000
4,300,000
4,250,000
4,200,000
4,150,000
4,100,000
4,000,000
3,950,000
3,900,000
3,850,000
N.C. Employment Security Commission
North Carolina Employment, Dec. 2007 - Jan. 2011
9
OVERVIEW OF THE RECENT ECONOMIC RECESSION
Not all areas experienced the same change in unemployment over the course of the recession. The following graph
shows the economic development regions and tier unemployment rates at their recessionary high and current levels.
Unemployment has not declined signifi cantly since its peak during the recession. All categories experienced their
unemployment rate peak in March of 2010 except for the NC Southeast region and the Tier 3 counties, which experienced
their highest unemployment rate in April 2010. Tier 1 counties experienced the highest peak unemployment rate, 13.3
percent. The RTRP region had the lowest rate, while the Charlotte region has experienced the largest post-recession
decline, 1.5 percentage points.
14%
12%
10%
8%
6%
4%
2%
0
Advantage
West
􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹒
Regional
NC Eastern NC
NorthEast
NC
SouthEast
Piedmont
Triad
Research
Tri.
Regional
Tier 1
Maximum
Current
Tier 2 Tier 3
1. Unemployment Rates are 12-month averages
􀀘􁠁􀄂􀈁􀆚􉨁􀄂􀈀􀀃􀌁􀅝􅴁􀆐􉀀􀀃􀌁􀄨􂠁􀆌􈰁􀅽􇴁􀅵􇔀􀀃􀌁􀄐􁀁􀄂􀈁􀅯􆼁􀄐􁀁􀆵􋔁􀅯􆼁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘁􀆐􉀀􀀃􀌁􀄏􀼁􀄂􀈁􀆐􉀁􀄞􁸁􀄚􁨀􀀃􀌁􀅽􇴁􀅶􇘀􀀃􀌀􀁅􄔃􀍘􅠀􀀒􁈃􀍘􅠀􀀃􀌀􀀜􁰁􀅵􇔁􀆉􈤁􀅯􆼁􀅽􇴁􀇇􌜁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌀􀁞􅸁􀄞􁸁􀄐􁀁􀆵􋔁􀆌􈰁􀅝􅴁􀆚􉨁􀇇􌜀􀀃􀌀􀀒􁈁􀅽􇴁􀅵􇔁􀅵􇔁􀅝􅴁􀆐􉀁􀆐􉀁􀅝􅴁􀅽􇴁􀅶􇘀􀀃􀌁􀄚􁨁􀄂􀈁􀆚􉨁􀄂􀉓
Source: Calculations based on N.C. Employment Security Commission data
Percentage Point Change in 12 Month Unemployment Rate Average from Dec. 2007 to Jan. 2011
Highest Recessionary Unemployment Rate Compared to Present Rate 1
Map Created March 2011
State’s seasonally adjusted unemployment rate difference from December 2007 to Januarly 2011 was 4.8 percentage points.
Unemployment
Percentage Point Increase
2.8% - 3.6%
3.61% - 4.8%
4.81% - 6%
6.01% - 8.45%
10
HOUSEHOLD FINANCES AND THE HOUSING MARKET
Not surprisingly, the recession and associated loss of jobs signifi cantly impacted families. Household fi nances were
negatively impacted by the simultaneous decline in wealth associated with the decrease in housing and stock values
and deterioration in the job market. According to the latest forecasts prepared by Dr. Michael Walden, the William Neal
Reynolds Distinguished Professor of Economics at North Carolina State University, income and consumer spending
declined signifi cantly during the recession and continues to be an issue. While the downward trend was less pronounced
in the latter half of 2010, it is expected to continue for the near future. The decreased consumer wealth continues to
have a depressing effect on retail sales. “Sales in 2010 are tracking sales in 2009 but are still well below those in the
pre-recessionary year of 2007.”6
A key driver of the recession was the housing market. The “housing bubble” built up earlier this decade ultimately led
to the “housing bust” of plummeting sales and weak prices over the past four years. In 2010, there were over 48,000
foreclosure fi lings in the State, an increase of nearly 31 percent from the year before.7 On a positive note, home
foreclosures in North Carolina for December 2010 through February 2011 were all lower than their levels from a year ago.
The number of home foreclosure notices in December declined 15 percent from the same month a year ago.
Recently released data from the North Carolina Association of Realtors shows home sales in February 2011 are up 2
percent from the year before (4,782 units sold compared to 4,687). In fact, since the beginning of 2010, the only months
where home sales were below the level from the same month in the previous year was from July 2010 to November 2010.
Existing Home Sales in North Carolina
Jul. 10 Aug. 10 Sep. 10 Oct. 10 Nov. 10 Dec. 10 Jan. 11 Feb. 11
Units Sold 6,772 6,533 6,219 5,712 5,387 6,507 4,750 4,782
% Change Prev. Month -28.8% -3.5% -4.8% -8.2% -5.7% 20.8% -27.0% 0.7%
% Change Year Ago -19.0% -15.7% -16.1% -26.7% -28.3% 10.2% 8.2% 2.0%
CONCLUSION
The impacts of the recent recession are still being felt and signifi cant economic challenges confronting the state will
continue for the foreseeable future. Existing economic development efforts and programs designed to help address
recession related issues, such as the heightened unemployment rate, job losses in key statewide industries, and
weak housing sales are increasingly important. Still, North Carolina must not lose sight of its long-term economic
strengths, challenges and opportunities. The long-term impacts resulting from solutions created to deal with short-term
problems should be strongly considered before any decisions are made. While the overall impacts of the recession
are unquestionably damaging to North Carolinians, it provides North Carolina with the opportunity to realign resources
and programs. The State has the potential to exit the economic crisis stronger and in a more competitive position, both
nationally and globally.
6 Dr. Michael L Walden. “The North Carolina Economic Outlook.” Winter 2010.
7 Data from Realty TRAC
OVERVIEW OF THE RECENT ECONOMIC RECESSION
N.C. Association of Realtors
11
Key Findings
• North Carolina ranks as the 10th largest state in the United States with a population of 9,458,888.
• Since 2005, the State experienced the highest growth rate (9.3 percent) among comparison states.
• The State’s population growth is primarily due to net migration. Fifty percent of the growth is attributable to individuals
moving to North Carolina from other states.
• From 2000 to 2009, all seven economic development regions in North Carolina demonstrated positive
population growth.
• Net migration is the leading factor contributing to population growth in all regions except for the Eastern and
Southeast Regions.
Indicator Overview
Changes in population have social and economic implications that infl uence business-location decisions, infrastructure
demands and service requirements. North Carolina’s population experienced substantial growth over the past decade due
to people moving to the State from other states or countries (positive net migration). Population growth is considered an
indication of economic opportunity as people often move to regions where there are jobs.
How Does North Carolina Perform?
North Carolina is ranked as the 10th largest state in the country with a resident population total of 9,458,888. The State
recorded the highest rate of growth (9.3 percent) among comparison states during the 5-year period ending in 2010 [1-1].
The state’s population growth rate was more than two times the national average. Georgia, South Carolina and Virginia, all
Southeastern states, experienced population growth in excess of 5 percent over the same time period.
INDICATOR 1: POPULATION
-2%
0%
2%
4%
6%
8%
10%
US NC GA MA MI PA SC VA
4.5%
9.3%
9.0%
2.8%
-1.6%
1.7%
8.1%
5.4%
U.S Census Bureau
1-1 Population Growth, 2005 - 2010
12
INDICATOR 1: POPULATION
Between 2000 and 2009, North Carolina’s population increased by more than 1.3 million [1-2]. Three components make
up population growth: 1) natural growth - the excess of births over deaths; 2) in-migration - the movement of people from
another state to North Carolina; and 3) immigration - the movement of people from outside the country to North Carolina.8
North Carolina’s population growth is due primarily (66.0 percent) to net migration (people who moved into N.C. less those
who moved out). Most of this growth (85 percent) occurred in counties linked to a municipality of at least 50,000 people.
Sixteen percent of the overall growth is attributable to immigration and 50 percent is attributable to individuals moving to
North Carolina from other states.
Over the same time period, all seven economic development regions in North Carolina demonstrated positive population
growth. The Charlotte and Research Triangle regions each experienced an increase in population of more than 445,000
people [1-2]. These two regions account for 67 percent of the State’s population growth (902,455 people). Net migration
is the leading factor contributing to population growth in all regions except for the Eastern and Southeast Regions.
1-2 County Population Change by NC Economic Development Regions, 2000-20099
Region Population Change % Natural Increase % Net Migration
Advantage West 73,779 5.9% 94.1%
Charlotte Region 445,830 30.3% 69.7%
Eastern Region 71,443 78.9% 21.1%
Northeast Region 17,602 25.0% 75.0%
Southeast Region 117,745 51.6% 48.4%
Piedmont Triad Region 164,492 37.3% 62.7%
Research Triangle Region 456,625 29.7% 70.3%
North Carolina Total 1,347,516 34.0% 66.0%
The United States’ population is aging. On January 1st of 2011, the oldest of the Baby Boomer generation began turning
65. Every day since then and for the next 19 years, about 10,000 more will cross that threshold daily.10 North Carolina’s
population age breakdown nearly matches the United States, implying the Baby Boomer retirement trend will impact
the State similarly to the US as a whole [1-3]. In 2009 in North Carolina, Baby Boomers accounted for an estimated
2.4 million people, or 26% of the State’s total population. As this segment of the population ages, smaller, more recent
generations will be required to support a growing elderly population. However, the State’s workforce should remain a
robust size for the next several decades, considering more than half (53%) of North Carolina’s population is between
the ages of 25 and 64 and the rate of people migrating in from other states ranks 7th in the nation. Proportionally,
Pennsylvania’s “65 years and older” population is the highest among comparison states while Georgia’s is the lowest.
8 Walden, Michael L. North Carolina in the Connected Age: Challenges and Opportunities in a Globalizing Economy. Chapel Hill, NC: University of North Carolina Press,
2008.
9 The domestic migration measured at the county level includes movement from any U.S. County to another. Therefore, migration between counties in the same economic
development region will be counted as domestic migration.
10 Passel, Jeffrey and D’Vera Cohn. (2008). Baby Boomers Approach Age 65 – Glumly: Survey Findings About America’s Largest Generation [Executive Summary].
Pew Research Institute. http://pewresearch.org/pubs/1834/baby-boomers-old-age-downbeat-pessimism.
U.S Census Bureau
13
INDICATOR 1: POPULATION
1-3 Percent of Population by Age Group, 2009
Under 24 years 25 to 44 years 45 to 64 years 65 years and over
United States 34% 27% 26% 13%
North Carolina 34% 27% 26% 13%
Georgia 33% 26% 22% 9%
Massachusetts 28% 24% 24% 12%
Michigan 30% 22% 24% 12%
Pennsylvania 27% 22% 24% 13%
South Carolina 30% 23% 23% 12%
Virginia 30% 25% 23% 11%
What Does this Mean for North Carolina Economic Development?
The relationship between economic development and population growth is strong. North Carolina will experience
population growth from individuals moving from other states or countries if employment opportunities continue and
the State maintains a high quality of living. To meet the needs of an expanding economy, economic development
professionals will need to continue to focus on strategic workforce planning to ensure the State has an appropriately
sized workforce with necessary skill sets. In addition, as North Carolina’s population increases, policymakers will need to
continue to look for innovative ways to fund infrastructure (schools, utilities, roads/transit, broadband, water/sewer, etc.)
improvements.
U.S Census Bureau
14
INDICATOR 2: LABOR FORCE
Key Findings
• Between 2005 and 2010, North Carolina’s labor force grew 3.7 percent, greater than the United States rate of 3.1
percent. Employment fell by 2.1 percent, greater than the national average of 1.9 percent.
• North Carolina’s labor force participation rate of 63 percent in 2010 is lower than the state’s rate of 66 percent
in 2005.
• Women make up 2.2 percentage points more of the employed population in 2009 than they did in 2005.
• Labor force participation rates among older workers (55+ years old) are increasing, but this increased participation is
being offset by declining participation among younger workers (between 24 and 54 years old).
Indicator Overview
A state’s labor force is defi ned as the number of people employed plus those seeking employment. Labor force growth
can signify a positive economic outlook. The labor force participation rate is the ratio between a state’s labor force and its
total population. Historically, increases in labor force participation were the result of population increases associated with
the “Baby Boomer” generation and women entering the workforce. Future labor force participation rates should increase
as the State recovers from the recession and older workers increasingly have the ability and need to work longer in life.11
How Does North Carolina Perform?
While the State’s labor force grew larger, the State’s employment level dropped, decreasing 2.1 percent in the last fi ve
years. This trend was not unique to North Carolina as all comparison states except Virginia and South Carolina saw
a decrease in employment levels. Of the comparison states, North Carolina had the fourth lowest percent decline of
employment. All comparison states had an increase in labor force except Michigan which registered a 5.4 percent
decrease from 2005 to 2010. The percent increase in labor force participation in North Carolina, South Carolina,
and Virginia were all above the national average. This may indicate increased desire by the labor force to work in the
Southeastern United States and companies to locate in the State.
11 Mary Daly and Tali Regev, “Labor Force Participation and the Prospects for U.S. Growth”, http://www.frbsf.org/publications/economics/letter/2007/el2007-33.
html#subhead2
VA
SC
PA
MI
MA
GA
NC
US
3.1%
3.7%
1.7%
3.3%
1.1%
5.0%
0.0%
6.7%
3.0%
-2.8%
-11.1%
-5.4%
-0.7%
-3.7%
-2.1%
1.9%
Labor Force Employment
U.S. Bureau of Labor Statistics
2-1 Growth in Labor Force and Employment, 2005 - 2010
15
INDICATOR 2: LABOR FORCE
For much of the past four decades, labor force participation rates in the United States trended up, rising from less than
60 percent in the early 1960s to more than 67 percent by the late 1990s. However, after peaking in 2000, the labor force
participation rate has declined steadily. The aging of the baby boom cohort is increasing the size of older age groups,
which historically have lower labor force participation rates, and teenagers and young adults are remaining in school
longer.12 Both of these were exacerbated by the recession. The widespread loss of jobs and wealth forced more members
of the baby boom cohort to delay retirement. The loss of jobs pushed more students to remain in school in the hopes of
increasing their marketability and delaying entry into the job market until more positions were available.
Although the overall labor force has grown, labor force participation rates have declined in the United States since 2005
[2-2]. This is because the U.S. population has been growing faster than the labor force. In 2005, North Carolina’s labor
force participation rate was 66.2 percent; in 2010 it dropped to 62.7 percent, below the national average of 64.7 percent.
Among comparison states, only Georgia and Michigan had larger percentage point drops in participation rates. Virginia
was the only state to experience an increase in labor force participation between 2005 and 2010, likely due to the
presence of Federal employees and contractors. The labor force participation rates for 2005 and 2010 are shown below.
12 Aaronson, Stephanie et al. “The Recent Decline in Labor Force Participation and its Implications for Potential Labor Supply.” Division of Research and Statistics,
Board of Governors of the Federal Reserve System. March 2006. http://bigpicture.typepad.com/comments/fi les/200603bpea_aaronson.pdf
56.0%
58.0%
60.0%
62.0%
64.0%
66.0%
68.0%
70.0%
US NC GA MA MI PA SC VA
66.0%
64.7%
66.2%
62.7%
68.4%
63.5%
66.8%
66.2%
2-2 Labor Force Participation Rates, 2005 & 2010
65.4%
61.6%
64.6%
63.5%
63.8%
61.3%
68.7%
68.9%
2005 2010
Source: U.S. Bureau of Labor Statistics
Note: The chart starts at 56 percent to better show the difference between years.
2-2 Labor Force Participation Rates, 2005 & 2010
16
In addition to the decline in labor force participation, the recent recession has changed the male-female composition
of the workforce. The loss of many male dominated jobs has led many people to term the last recession as a
“mancession.”13 This male job loss has caused women’s share of employed workers to increase, especially in North
Carolina. From 2005 to 2009 the women’s share of employed workers in North Carolina has increased 2.2 percentage
points, from 46.1 percent to 48.3 percent. This was the largest increase among competitor states and more than twice
the percentage point increase nationally. Nationally, women’s share of employment is lower than North Carolina’s, 47.3
percent and 48.3 percent respectively. South Carolina had the next highest jump from 2005 to 2009, going from 47.9
percent to 49.8 percent. This employment shift towards women refl ects the jobs the recession left behind. The economy
mainly lost jobs in the construction and manufacturing fi elds, which tend to employ more men than women. Meanwhile,
women tend to work in more “white collar” positions such has health care and education. Women have also seen higher
college graduation rates in the last 10 years, another buffer against unemployment.
Older adults (55 years and older) usually choose to exit the workforce, but market forces and increased access to medical
care have extended the working lives of many cohorts, including the Baby Boomers. This historical trend reversal for the
Baby Boomer generation means they have increased their labor force participation rate. They still fall behind the rates
of workers in the lower age groups, but in a slow economy those are positions that would have been fi lled by younger
workers .14 As the population of North Carolina continues to age, the increased participation rate of older workers will
cause the older labor force cohort to grow at a faster rate than before. In 2010, the percentage of workers aged 55 and
above participating in the labor force was 38.2 percent, up from 35.2 percent in 2005 and 33.6 percent in 2000.
13 Sarah Baxter, “Women are victor in ‘Mancession’”, The Times, http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6445913.ece
14 Catherine Rampell, NY Times 7/15/2010, “Seniors Outnumber Teenagers in Job Force”, http://economix.blogs.nytimes.com/2010/07/15/seniors-outnumber-teenagers-
in-job-force/
40%
42%
44%
46%
48%
50%
46.4%
2005 2009
47.3%
46.1%
48.3%
46.5%
46.6%
48.4%
49.2%
46.8%
48.5%
47.2%
48.0%
47.9%
49.8%
47.4%
48.5%
US NC GA MA MI PA SC VA
INDICATOR 2: LABOR FORCE
Source: U.S. Bureau of Labor Statistics
Note: The chart starts at 56 percent to better show the difference between years.
2-3 Female Share of Employment, 2005 & 2009
17
This shift is made more important since the share of workers between ages 25 and 54 participating in the labor force has
decreased from 85.2 percent in 2000 to 82.2 percent in 2010. The three percentage point decline in the “prime” age
group, 25 to 54 years old, is smaller than the increased participation rate among those over 54 years of age. However,
the “prime” group makes up the largest portion of the work force; there are 107,000 more people in the labor force
over 54 years of age than there would be had the participation rate remained the same as it was in 2000. Meanwhile,
the decreased participation rate by workers in the “prime” group (25 to 54) decreased their labor force participation
by 111,000 people. Thus, shifting participation rates by North Carolinians 25 and older has lead to a decrease of
approximately 7,000 people had the participation rates remained at 2000 levels.15
What Does this Mean for North Carolina Economic Development?
The majority of North Carolina’s labor force is currently between the ages of 25 and 54. As this population segment
ages, it is predicted many of these workers will stay in the labor force longer due to economic reasons. Given the recent
decline in job opportunities for workers in labor-intensive industries and the aging workforce, programs like occupational
extension and workforce development will continue to increase in value, particularly for older workers. The recent loss of
male dominated fi elds will also increase the need for training and educational programs to provide skills needed to fi ll jobs
around the State and relieve the pressure from high unemployment on the economy.
15 This assumes all other demographic trends since 2000, such as population increases, would have occurred.
2000 2005 2010
0
10
20
30
40
50
60
70
80
90
16 to 24 years 25 to 54 years 55 years and over
67.2%
61.4%
53.4%
85.2%
82.5%
82.2%
33.6%
35.2%
38.2%
INDICATOR 2: LABOR FORCE
Source: U.S. Bureau of Labor Statistics
2-4 Labor Force Participation Rate in North Carolina by Age Group,
2000, 2005 & 2010
18
Key Findings
• From 2005 to 2010 the State has a net job loss of approximately 23,700 across all industries. Manufacturing
sector losses are 137,100, meaning all other sectors have had a net gain of 113,400 jobs over this time.
• Five years ago the manufacturing industry in North Carolina only trailed the public sector in employment, now it has
fallen to fourth behind both Health Care and Retail Trade.
• The public sector is the largest employment sector, employing one in fi ve working North Carolinians; 18 percent of
public sector employment is military, 24 percent is state government, and 52 percent is local government (including
teachers).
• The percent of total employment coming from traditional or labor intensive industries has decreased from 29 percent
of North Carolina’s total industry employment to 24 percent.
Indicator Overview
Industry concentration and employment trends help to determine an economy’s overall health. Analyzing industry trends
can highlight existing competitive advantages, provide insight into the existing workforce skills, and divulge whether a
region’s economic base is susceptible to economic downturns. More specifi cally, understanding how a region’s industry
mix compares to others and how it has changed allows economic development professionals to target scarce resources for
industrial recruitment and expansion, workforce development, and international trade.
How Does North Carolina Perform?
Over the past fi ve years, ten of the twenty super-sectors measured have gained industry employment and ten have
lost employment.16 In general, the changes have lead to a transition away from the State’s traditional, labor intensive,
production-oriented, “blue collar” industries to more of a service and knowledge-based “white collar” economy. Between
2005 and 2010, 91 percent of job growth has been in the service sector industries. Meanwhile, manufacturing industries
have accounted for 56 percent of job losses.
The recession has served to accelerate the State’s economic
transformation. Since 2007 over 100,000 jobs have been
lost in the manufacturing sector. In contrast, only fi ve
sectors have experienced job growth during this time. This
accounts for 90,000 additional jobs, with 97 percent of the
growth concentrated to service sector industries. The public
sector accounts for over 50 percent of the job growth over
this time. Currently, the public sector employs 22 percent
of all employed people in North Carolina, which exceeds
the national average of public sector employment (18
percent). However, the largest source of North Carolina’s
over-concentration in government employment is military
sector employment, which is more than double the national
average. When removed, civilian government workers only
account for 18 percent of the total civilian workforce in North
Carolina compared to 17 percent nationwide.
16 Data used in this section includes all employees covered by unemployment insurance. Covered employment is subject to the Employment Security Law on which
Unemployment Insurance taxes must be paid.
INDICATOR 3: INDUSTRY MIX
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
White Collar Blue Collar
3-1 Industry Type
2005 2010 2015
Economic Modeling Specialists, Inc.
19
3-2 North Carolina Employment by Industry Sector, 2005 & 2010
Industry Sector
2005 2005 - 2010
% of Total Employment % of Total
Total
Change
%
Agriculture, forestry, fi shing and hunting 29,289 0.73% 27,570 0.69% -1,719 -6%
Mining 3,522 0.09% 3,577 0.09% 55 2%
Utilities 13,277 0.33% 12,379 0.31% -898 -7%
Construction 233,351 5.82% 174,742 4.38% -58,609 -25%
Manufacturing 570,876 14.23% 433,722 10.88% -137,154 -24%
Wholesale trade 171,666 4.28% 166,656 4.18% -5,010 -3%
Retail trade 447,271 11.15% 436,525 10.95% -10,746 -2%
Transportation and warehousing 136,529 3.40% 121,453 3.05% -15,076 -11%
Information 77,049 1.92% 69,736 1.75% -7,313 -9%
Finance and insurance 143,012 3.57% 144,920 3.63% 1,908 1%
Real estate and rental and leasing 50,329 1.25% 49,895 1.25% -434 -1%
Professional and technical services 160,809 4.01% 174,473 4.38% 13,664 8%
Management of companies and enterprises 63,594 1.59% 72,186 1.81% 8,592 14%
Administrative and waste services 225,571 5.62% 229,959 5.77% 4,388 2%
Educational services 51,235 1.28% 63,218 1.59% 11,983 23%
Health care and social assistance 397,468 9.91% 463,642 11.63% 66,174 17%
Arts, entertainment, and recreation 45,821 1.14% 54,124 1.36% 8,303 18%
Accommodation and food services 313,783 7.82% 338,232 8.48% 24,449 8%
Other services (except public administration) 97,609 2.43% 90,713 2.27% -6,896 -7%
Government 779,128 19.42% 859,732 21.56% 80,604 10%
Totals 4,011,189 100% 3,987,454 100% -23,735 -1%
Economic Modeling Specialists, Inc.
Job loss in the manufacturing sector garnered signifi cant attention in recent years. As mentioned previously, ten of the
twenty industry sectors in the chart above have lost employment since 2005. However, only three lost employment
between 2005 and 2007, and the manufacturing sector accounted for 87 percent of the State’s gross employment loss
during that time. Although the losses experienced in the manufacturing sector have accelerated, the decline of the sector
was occurring prior to the recession. Even though North Carolina’s largest traditional industry sector is in severe decline,
successful signs exist especially when taken in the context of six of the State’s competitors and the U.S. as a whole.
Between 2005 and 2010, North Carolina experienced losses in other sectors as well. Construction, Transportation &
Warehousing, Information, and Retail Trade lost a combined 91,744 jobs during this period. However, the State also
experienced signifi cant employment increases in other sectors to partially offset these losses. Employment in Health
Care & Social Assistance, Accommodations & Food Services, Educational Services, Professional & Technical Services,
Management of Companies & Enterprises, and Arts, Entertainment & Recreation increased by 133,165.
Only two competitor states, Georgia and Michigan, have lost larger portions of their manufacturing industry. From 2005
to 2010, these states have experienced overall employment losses across all industry sectors of 5 percent and 13
percent, respectively, while North Carolina has lost less than 1 percent of its overall employment over the same period.
For comparison, the Nation as a whole has lost 19 percent of its manufacturing sector and 3 percent across all industry
sectors. North Carolina’s large manufacturing losses amounting to one quarter of the 2005 sector level employment has
signifi cantly impacted the State’s economy. The State’s overall employment loss of 1 percent between 2005 and 2010
appears to indicate North Carolina’s economy is transitioning away from manufacturing to other sectors.
INDICATOR 3: INDUSTRY MIX
Employment
2010
20
2005
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
NC US GA MA MI PA SC VA
2010
INDICATOR 3: INDUSTRY MIX
What Does this Mean for North Carolina Economic Development?
Recent industry employment trends can be used to gauge which industries are growing or contracting as well as to
determine resource allocation for infrastructure improvements, incentives, and workforce development. The transition of
North Carolina’s economy from labor-intensive traditional industries to knowledge-based or service-related industries such
as health care and technical services suggests the need to continue workforce training and redevelopment opportunities
for displaced workers. This trend has persisted for every year since at least 1990 with service and knowledge-based
industries growing at a faster rate (or shrinking at a slower rate) than traditional labor intensive industry sectors. Still,
the State’s traditional labor-intensive industries will have a place in the State’s economy for years to come. Rather than
disappearing, North Carolina’s traditional manufacturing industries are likely to take on higher value-added or more
technologically advanced activities to ensure competitiveness in the global economy.
3-3 Change in the Manufacturing Industry 2005 - 2010
Percent of Total Employment in Manufacturing Manufacturing
Employment Change
Total Change
%
Change
NC -137,154 -24%
US -2,631,352 -19%
GA -58,857 -28%
MA -51,616 -17%
MI -211,188 -31%
PA -121,350 -18%
SC -53,696 -20%
VA -64,716 -22%
Economic Modeling Specialists, Inc.
21
INDICATOR 4: OCCUPATIONAL MIX
Key Findings
• When ranked by employment, the top fi ve occupations in North Carolina all earn less than $30,500 annually.
• All fi ve of the top earning occupations in North Carolina have median annual earnings of $60,000 or more.
• Between 2005 and 2010, jobs in managerial, professional and technical occupations, generally considered desirable
occupations, grew 7 percent in North Carolina despite the recession.
• All seven of the State’s economic development regions experienced signifi cant growth in community and social services
occupations.
Indicator Overview
Knowledge-based jobs sustain an economy by increasing labor productivity and wealth. These jobs help insulate a
region from adverse business events that typically cause economic downturns. A region’s occupation mix can range from
occupations that are knowledge-intensive and associated with higher levels of educational attainment to those historically
requiring less education. Occupational composition can also help explain differences in wages among regions.
How Does North Carolina Perform?
When ranked by employment, the top fi ve occupations in North Carolina all earn less than $30,500 annually [4-1].17 Each
of these, excluding food preparation and serving, experienced employment declines between 2005 and 2010. However,
prior to the Great Recession18 only production jobs were in decline. Over the 2005 to 2010 timeframe, production
employment declined in every region of the State, resulting in a loss of 92,950 jobs (-22.2 percent).
17 Top fi ve North Carolina Occupations [2010 employment]: 1) Offi ce and administrative support [592,467]; 2) Sales [403,920]; 3) Food preparation [340,739];
4) Production [325,484]; and 5) Transportation and Material Moving [276,046].
18 The Great Recession began in December, 2007.
0
100,000
200,000
300,000
400,000
500,000
600,000
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌁
􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀􀁄􄐁􀄂􀈁􀆚􉨁􀄞􁸁􀆌􈰁􀅝􅴁􀄂􀈁􀅯􆼀􀀃􀌀
􀁄􄐁􀅽􇴁􀇀􌀁􀅝􅴁􀅶􇘁􀅐􅀀􀀃􀌀
􀀦􂘁􀅽􇴁􀅽􇴁􀄚􁨀􀀃􀌀 􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌀
􀁗􅜁􀆌􈰁􀄞􁸁􀆉􈤁􀄂􀈁􀆌􈰁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌁
􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀􀁞􅸁􀄞􁸁􀆌􈰁􀇀􌀁􀅝􅴁􀅶􇘁􀅐􅀀
􀁞􅸁􀄂􀈁􀅯􆼁􀄞􁸁􀆐􉀀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌁
􀆌􈰁􀄞􁸁􀅯􆼁􀄂􀈁􀆚􉨁􀄞􁸁􀄚􁨀􀀃􀌀
􀁋􄬁􀄸􃠁􀄐􁀁􀄞􁸀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀
􀀄􀐁􀄚􁨁􀅵􇔁􀅝􅴁􀅶􇘁􀅝􅴁􀆐􉀁􀆚􉨁􀆌􈰁􀄂􀈁􀆟􉼁􀇀􌀁􀄞􁸀􀀃􀌀
􀁞􅸁􀆵􋔁􀆉􈤁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨀􀀃􀌤
$30,430
$28,205
$18,408 $29,286
$28,475
Economic Modeling Specialists, Inc.
4-1 Top Employment Occupations in North Carolina
Annual Median Wages and Unemployment, 2010
22
INDICATOR 4: OCCUPATIONAL MIX
On average, management occupations pay the highest wages in the North Carolina, followed by computer and
mathematical science occupations and health care practitioners [4-2]. All fi ve of the top earning occupations in the State
have median annual earnings of approximately $64,000 or more. However, there are far less North Carolinians working in
the top fi ve earning occupations (14 percent) than those working in the top employing occupations (49 percent) discussed
in chart 4-1.
Growth in management, professional and technical occupations19 often indicates a state’s transition into a knowledge-based
economy.20 These occupations are generally associated with higher educational attainment levels (bachelor’s
degree or higher) and corresponding higher wages. Despite the Great Recession, jobs in managerial, professional and
technical occupations grew by 7 percent in North Carolina. All seven economic development regions in the State added
knowledge-based jobs between 2005 and 2010. However, most were concentrated in the State’s more urban regions
[4-3]. While the Research Triangle (10 percent), Charlotte (8 percent), and Eastern (7 percent) regions all experienced
growth from 2005 to 2010, the rates were signifi cantly slower than the growth from years prior at 18 percent, 16 percent,
and 11 percent, respectively (2003-2008).
19 Occupations categories include: management; business and fi nancial operations; computer and mathematical science; architecture and engineering; life, physical and
social science; community and social service; legal; education, training and library; and arts, design, entertainment, sports, and media.
20 Atkinson, R.D., and R.H. Court. 1998. The New Economy Index: Understanding America’s Economic Transformation. Washington, DC: Progressive Policy Institute.
0
50,000
100,000
150,000
200,000
250,000
Architecture
and engineering
Healthcare Legal
􀆉􈤁􀆌􈰁􀄂􀈁􀄐􁀁􀆟􉼁􀆟􉼁􀅽􇴁􀅶􇘁􀄞􁸁􀆌􈰁􀆐􉀀􀀃􀍡
and technical
􀀒􁈁􀅽􇴁􀅵􇔁􀆉􈤁􀆵􋔁􀆚􉨁􀄞􁸁􀆌􈰀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌁
􀅵􇔁􀄂􀈁􀆚􉨁􀅚􅨁􀄞􁸁􀅵􇔁􀄂􀈁􀆟􉼁􀄐􁀁􀄂􀈁􀅯􆼀􀀃􀌁
􀆐􉀁􀄐􁀁􀅝􅴁􀄞􁸁􀅶􇘁􀄐􁀁􀄞􁸀􀀃􀌀
􀁄􄐁􀄂􀈁􀅶􇘁􀄂􀈁􀅐􅀁􀄞􁸁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌤
$91,603
$72,238
$68,848
$67,288
$63,898
Economic Modeling Specialists, Inc.
4-2 Top Earning Occupations in North Carolina
Annual Median Wages and Employment, 2010
23
INDICATOR 4: OCCUPATIONAL MIX
From 2005 to 2010, all seven of the State’s economic development regions experienced signifi cant growth in community
and social services occupations. Six of the seven regions added jobs in health care practitioners, technical, and support
groups [4-4]. Healthcare occupations should continue to grow in the region as North Carolina’s population both ages and
grows. In health care occupations, home health aides have the largest worker growth from 2005 to 2010, adding over
12,000 positions, but have a median annual wage of around $19,000 or $9.53 an hour.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Southeast
Region
Research
Triangle
Region
Piedmont
Triad
Region
Northeast
Region
Eastern
Region
􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹒
Region
Advantage
West
2005 jobs 2010 jobs
Economic Modeling Specialists, Inc.
4-3 Management, Professional and Technical Occupations by
North Carolina Economic Development Region
24
INDICATOR 4: OCCUPATIONAL MIX
4-4 Top 5 Growing Occupations by Economic Development Region, 2005-2010
Advantage
West
Charlotte Eastern Piedmont
Triad
North
East
Research
Triangle
South
East
Community and social services 7% 18% 23% 16% 22% 14% 19%
Computer and mathematical science 14% 11%
Food preparation and serving related 12%
Health care practitioners and technical 8% 15% 10% 11% 7% 24%
Health care support 12% 20% 10% 16% 21% 17%
Life, physical, and social science 16% 11% 13%
Personal care and service 15%
Business and fi nancial operations occupations 5% 10%
Education, training, and library occupations 7% 16% 9% 10% 8%
Protective service occupations 8% 9%
What Does this Mean for North Carolina Economic Development?
As North Carolina transforms into a knowledge-based economy, the State will need to continue to create opportunities
for citizens to move into knowledge-intensive occupations. Strategies to accomplish this may include increased science,
math and technology curriculum offerings, and continued investment in targeted workforce development programs to
retrain displaced workers. In addition, community development efforts and improved access to basic services, such as
health care, are increasingly important as North Carolina transitions to a knowledge-based economy. Individuals who seek
managerial, professional, and technical jobs tend to be highly mobile and willing to move, resulting in quality of life playing
an important role in recruiting and retaining talent.
Economic Modeling Specialists, Inc.
25
INDICATOR 5: EXPORTS
Key Findings
• In 2010, North Carolina’s exports of goods21 totaled $24.8 billion, a 13.9 percent increase from 2009.
• Canada remained the State’s top export market; however, exports to Canada fell 4.5 percent while exports to China
grew 157.2 percent between 2005 and 2010.
• Chemicals were North Carolina’s leading exports, accounting for nearly one fi fth of the State’s total export value.
Indicator Overview
A state’s growth and prosperity depend on its ability to export goods and services to foreign markets as 80 percent of
the global economy lies outside the United States.22 Despite the impact of the global recession on a state’s economy,
the value of a state’s exports continue to be a key driver of its gross domestic product (GDP). Diversifi cation of export
portfolios in industry sector and markets destination is the vital engine of the long-term economic growth in North Carolina.
How Does North Carolina Perform?
In 2010, North Carolina’s exports totaled $24.8 billion representing an increase of 13.9 percent over the previous year
while the U.S. exports rose 21 percent to $1.3 trillion. Among its southern comparison states, North Carolina ranked
higher than South Carolina and Virginia but behind Georgia in the value of exports. Michigan outperformed all benchmark
states due largely to its high volume exports in transportation equipment, such as motor vehicles and parts as well as
aerospace products and parts. In 2010, growth prevailed in nearly every export sector in North Carolina. Companies in
the Machinery, Electrical, & Transportation Equipment and Paper industries saw signifi cant growth. Growth in exports was
less for Computer & Electronic Products as well as Textiles and Fabrics. Though the Chemical sector was one of the few
industries that experienced decline in exports in 2010, it still accounted for one-fi fth of the North Carolina’s total exports.
Measured by percentage growth in exports between 2005 and 2010, North Carolina gained 13.6 percent. Pennsylvania
experienced the largest increase at 39.2 percent, whereas Michigan grew merely 5 percent, the lowest one among the
benchmark states.
21 The export indicator provides statistics on exports of goods only. All fi gures are for total exports (domestic exports plus re-exports) and are drawn from the Origin of
Movement (OM) series compiled by the Foreign Trade Division of the U.S. Census Bureau. OM data cover exports of goods only. There are no comparable statistics for
exports of services at the state level.
22 Business Roundtable’s Trade Resource Center http://trade.businessroundtable.org/trade_2006/wto/us_economy.html
0
$10
$20
$30
$40
$50
NC GA MA MI PA SC VA
(in Billions)
2005
2010
$21.8
$24.8
$23.1
$28.7
$24.7
$26.3
$42.4
$44.5
$25.0
$34.8
$15.6
$20.3
$13.7
$17.1
Source: Wisertrade 2011
5-1 Export Dollar Value, 2005 & 2010
(in 2010 dollars)
26
INDICATOR 5: EXPORTS
Canada has long been North Carolina’s leading export market in terms of dollar value. In 2010, companies in North
Carolina exported $5.4 billion worth of goods to Canada, up 19.9 percent from the previous year. China and Mexico
ranked second and third for North Carolina export markets, totaling $2.2 billion and $1.8 billion, respectively. Among
its top ten export markets, North Carolina’s exports to China represented the largest destination country increase
(157.2 percent) during the 2005 – 2010 period; followed by Brazil (93 percent) and France (60.3 percent).
Between 2005 and 2010 Computers & Electronics, Textiles & Fabrics, and Plastics & Rubbers experienced declines in
exports, but still remain among the State’s top ten export sectors in 2010. Chemical sector gained slightly over $1 billion
in export sales; however, measured by percentage growth, Food & Kindred Products (meats, grains and dairy) saw the
largest increase at 105.2 percent. The increase was due in large part to the rising demand of the State’s food products
in Japan.
$0 $2 $4 $6
Canada
China
Mexico
Japan
France
United Kingdom
Germany
Honduras
Brazil
Korea, Republic
Netherlands
(in Billions)
5-2 NC Top Export Destinations
2005 2010
24.1%
22.3%
93%
3.2%
15.9%
-10.9%
60.3%
-1.7%
8.7%
157.2%
-4.5%
Source: Wisertrade 2011
27
5-3 North Carolina Top Exports, 2005 & 2010
(in 2010 dollars)
INDICATOR 5: EXPORTS
What Does this Mean for North Carolina Economic Development?
Despite the global recession and its impact on North Carolina’s economy, exports continued to be one of the key drivers
for the State’s economic development. Exporting helps companies in North Carolina diversify their business portfolios
and become more profi table and resilient in the global market. Exports are also critical in employment growth - nearly one
out of every ten jobs in the State is supported by exports.23 In addition to the United States Department of Commerce’s
presence across the globe, the International Trade Division of North Carolina’s Department of Commerce has staff
in North Carolina and in seven locations around the globe to facilitate export growth. For North Carolina to remain
competitive in the global economy, it must continue to explore new markets for the goods and services it produces. Such
efforts require focus in strengthening and expanding relationships with overseas trading partners and understanding how
North Carolina industries fi t within global commodity value chains. Infrastructure investment in highways, inland terminals
and port facilities is needed to improve the ability to effi ciently move goods. Enhanced export assistance and increased
availability of credits to small and medium-sized companies seeking to export are crucial in connecting businesses to the
global market place.
23 The statement is based on the 2010 IMPLAN analysis performed by the NC Department of Commerce to estimate export contribution to the state’s economy.
Food & Kindred
Products
Agricultural Products
􀁗􅜁􀅯􆼁􀄂􀈁􀆐􉀁􀆟􉼁􀄐􁀁􀆐􉀀􀀃􀌃􀎘􉠀􀀃􀌀􀁚􅨁􀆵􋔁􀄏􀼁􀄏􀼁􀄞􁸁􀆌􈱐
Products
Paper Products
Electrical Equipment,
Appliances, & Component
􀁤􆐁􀄞􁸁􀇆􌘁􀆟􉼁􀅯􆼁􀄞􁸁􀆐􉀀􀀃􀌃􀎘􉠀􀀃􀌀􀀦􂘁􀄂􀈁􀄏􀼁􀆌􈰁􀅝􅴁􀄐􁀁􀆐􉁃
Computer & Electronic
Products
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇙅
Equipment
Machinery,
Except Electrical
Chemicals
(in Billions)
$3.8
$4.8
$2.5
$3.1
$1.8
$2.6
$1.9
$1.5
$0.8
$1.1
$0.7
$1.1
$1.0
$1.0
$0.6
$0.9
$0.4
$0.8
$3.5
$2.6
2005 2010
Source: Wisertrade 2011
28
INDICATOR 6: ENERGY
Key Findings
• In 2009, the average industrial price of electricity in North Carolina was lower than the national average.
• Industrial electricity price increases from 2004 to 2009 were over 20 percent higher than from 2002 to 2007.
• For the period 2004-2009, North Carolina’s increase in average industrial electricity prices (23 percent) was less than
the United States average (28 percent). South Carolina and Virginia’s average increases over the period were 40
percent and 61 percent, respectively.
• North Carolina continues to add megawatts of renewable-generated electricity, due to a mandate adopted in 2007,
including over 4,500 megawatts of solar power.
Indicator Overview
Energy is critical to economic development. In particular, low cost power is important to the manufacturing sector in North
Carolina, despite the State’s ongoing transition towards service industries. In addition, the State has seen growth in a
number of energy intensive industries, such as data centers. The utility industry is regulated in North Carolina and most
customers are served by two investor-owned entities, Duke Energy and Progress Energy. In addition to Duke Energy and
Progress Energy, service is provided by electric membership corporations or municipal power systems. In North Carolina,
the Utilities Commission is responsible to the investor-owned utilities and the public to provide just and reasonable
rates and charges for public utility services and to promote conservation of energy. The cost of providing energy varies
by a state’s natural resources, transportation and electric infrastructure, types of power generation facilities, age of the
facilities, and anticipated future energy needs.
The electrical energy landscape is in a period of rapid change – and those changes could have bearing on North Carolina.
For example, the country’s nuclear plant fl eet is aging, and North Carolina’s Duke Energy has begun the permitting
process to build a new nuclear plant to serve the State’s customers. According to the National Energy Technology
Laboratory, 2010 marked the largest increase in gigawatts of capacity from coal since 1985; one of those new plants
was built at Cliffside in western North Carolina. Meanwhile, states have been more active than ever before in creating
policies to advance renewable energy sources such as wind and solar. The U.S. Energy Information Administration projects
“renewable-generated electricity will account for 17% of total U.S. electricity generation in 2035, up from 9% in 2008.”24
Federal loan guarantees and Recovery Act dollars have contributed to this growth by mitigating some of the risk.
How Does North Carolina Perform?
Electricity Costs
In 2009, the average industrial price of electricity in North Carolina was 5.99 cents per kilowatt hour, lower than the U.S.
average (6.70 cents) and all but one benchmark state (South Carolina). In recent years, North Carolina has competed with
lower prices in neighboring states, South Carolina and Virginia. However, in 2009, Virginia’s prices were nearly two cents
higher than they were in 2007 and nearly one cent higher than North Carolina’s.
Between 2004 and 2009, North Carolina’s average prices rose by a full cent in nominal terms [6-1]. While this is a
substantial increase, all comparative states experienced increases of more than 38 percent, except Pennsylvania. Thus,
North Carolina’s long-enjoyed competitive advantage in lower relative industrial electric prices still largely exists even as
the price increases. However, cost uncertainty exists in the sector due to the changing conditions with the State’s investor
owned utilities.25
24 EIA, “How much of our electricity is generated from renewable sources?”, http://www.eia.doe.gov/energy_in_brief/renewable_energy.cfm
25 North Carolina’s two investor-owned utilities (IOU’s), Duke Energy and Progress Energy, will begin general rate cases in 2011, a regulatory proceeding with the North
Carolina Utilities Commission that will determine how much of utility operations can be justly and fairly recoverable in rates. At the same time, Duke and Progress have
announced plans for a merger and indicated a desire to build new baseload, likely a nuclear plant, within the decade. Dr. Mike Walden, an economist at North Carolina
State notes in a recent news article that a merger could mean cost savings for customers: “if the larger company can better take advantage of economies of scale,
rates may be lower than they would have been with the smaller companies,” he said. On the other hand, rates could rise. A planned Progress nuclear facility in Florida is
expected to add $25 to monthly electric bills there, according to a report in the Charlotte Observer.
29
INDICATOR 6: ENERGY
6-1 Average Industrial Price of Electricity, cents per KWh, 2004-2009
(Prices are not adjusted for infl ation)
US NC GA MA MI PA SC VA
2004 5.25 4.88 4.43 8.48 4.92 5.87 4.13 4.27
2005 5.73 5.04 5.28 9.22 5.32 6.29 4.55 4.46
2006 6.16 5.23 5.38 13.04 6.05 6.63 4.71 4.69
2007 6.39 5.47 5.53 13.03 6.47 6.87 4.83 5.07
2008 6.83 5.54 6.67 14.85 6.74 7.02 5.37 5.82
2009 6.70 5.99 6.12 14.08 6.99 7.21 5.79 6.91
% change
04-09
27.6% 22.7% 38.1% 66.0% 42.1% 22.8% 40.2% 61.8%
Renewable Energy
In 2007, the North Carolina General Assembly enacted a mandatory Renewable and Effi ciency Portfolio Standard 26
(REPS), requiring 12.5 percent of retail energy sales to come from renewable and/or effi ciency sources by 2020. There
are 35 states with a renewable energy mandate, standard or goal, but no other state in the Southeast has a requirement.
This creates a potential competitive advantage for North Carolina over the rest of the Southeastern United States to attract
signifi cant new development of the renewable energy and energy conservation supply chains from energy equipment
to power generation. Between 2007 and 2009, the State added 4,563 MW of solar power and 44,646 MW of biomass
power, which along with other renewable generated energy sources (other than hydroelectric) contributed to an increase of
over 3 percentage points in renewable power generation from 2005 to 2009 [6-2].
26 http://www.ncga.state.nc.us/enactedlegislation/statutes/html/bysection/chapter_62/gs_62-133.8.html
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2009 Total Renewable
􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘲
2009 Renewables
w/o Hydro
2005 Total Renewable
􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘲
2005 Renewables
w/o Hydro
US NC GA MA MI PA SC VA
United States Energy Information Association data, 2010
6-2 Percent Generation in MWh Renewable Energy
with Hydroelectric Production, 2005 & 2009
Calculations based on Energy Information Association data, 2010.
30
INDICATOR 6: ENERGY
North Carolina outpaces many competitor states in solar generation as a portion of its total renewable portfolio. Solar
thermal and photovoltaic accounted for 0.2 percent of the State’s renewable portfolio in 2009, but in Georgia, Michigan,
South Carolina and Virginia, solar generation was zero. North Carolina currently does not have any developed wind
generation, but policymakers and economic developers are actively pursuing its potential on land and in the State’s
coastal waters. Wind accounts for over half of the total U.S. renewable portfolio [6-3].
6-3 Percent of State Renewable Portfolio by Energy Type, 2009
Geothermal Other Biomass Solar Thermal & PV Wind Wood Fuels
US 10.4% 12.8% 0.6% 51.4% 24.7%
NC 0.0% 6.9% 0.2% 0.0% 92.8%
GA 0.0% 2.8% 0.0% 0.0% 97.2%
MA 0.0% 90.1% 0.0% 0.5% 9.4%
MI 0.0% 31.8% 0.0% 11.4% 56.8%
PA 0.0% 47.1% 0.1% 32.1% 20.7%
SC 0.0% 7.9% 0.0% 0.0% 92.1%
VA 0.0% 29.3% 0.0% 0.0% 70.7%
Calculations based on Energy Information Association data, 2010
The costs associated with energy production have been a barrier for large-scale renewable production. “Renewable energy
power plants are generally more expensive to build and to operate than coal and natural gas plants. Recently, however,
some wind-generating plants have proven to be economically feasible in areas with good wind resources, compared with
other conventional technologies, when coupled with the [Federal] Renewable Electricity Production Tax Credit.”27 North
Carolina has also been active in studying energy conservation approaches, such as smart grid technology. In 2009 North
Carolina regulators cleared Duke Energy Carolinas to start a pilot program in Charlotte to establish a pilot “smart grid”
project.28
What Does this Mean for North Carolina Economic Development?
New economic development projects and the expansion of existing businesses are impacted by the cost, availability
and reliability of energy. North Carolina’s inexpensive and reliable electricity has historically been a competitive
advantage for economic development prospects. However, the State may be losing ground in this regard as the rising
cost of fuel and the State’s growing population and demand for energy leads to the construction of new generation
plants and potentially higher prices. To remain competitive for industrial projects, North Carolina must not only invest in
new energy infrastructure, but also expand initiatives designed to assist companies with energy effi ciency, such as the
State’s Industrial Extension Service. In addition, North Carolina should strive to increase the effi ciency of current power
generation facilities, implement existing effi ciency standards for state buildings, and encourage increased energy and
power research.
North Carolina’s energy landscape is likely to change in coming years. The potential merger of the State’s two investor
owned utilities, the baseload plants they plan to build, and the maturity of the State’s RPS will all be important factors
impacting power costs. Some potential impacts are likely to result in cost savings, while others are likely to increase costs.
The degree of these impacts and their cumulative effect on energy rates for customers remains largely unknown.
27 EIA, “How much of our electricity is generated from renewable sources?”, http://www.eia.doe.gov/energy_in_brief/renewable_energy.cfm
28 Triangle Business Journal, “North Carolina approves Duke Energy’s ‘smart grid’ initiative”, http://www.bizjournals.com/triangle/stories/2009/03/09/daily37.html
31
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
Key Findings
• In 2007, FDI infl ows to North Carolina grew 5.9 percent over 2006 while the United States saw an increase of
6.3 percent.
• Germany was North Carolina’s largest foreign investor in 2007, followed by the United Kingdom and Japan.
• In 2007, approximately 206,700 workers in North Carolina were employed by foreign owned companies.
Indicator Overview
Foreign direct investment (FDI) is a benchmark for measuring the presence of foreign-owned businesses in a state. FDI is
an important indicator of a state’s ability to attract foreign companies and a key determinate of a region’s ability to attract
new technologies, capital, workforce skills, global connections, and job opportunities.
How Does North Carolina Perform?
In 2007, North Carolina’s value of foreign direct investment grew 5.9 percent from the previous year to $30.7 billion
(in 2011 dollars29), representing 2.2 percent of the U.S. total. Between 2002 and 2007, FDI infl ows to North Carolina
experienced an increase of 4.5 percent while Pennsylvania grew 18.8 percent30 . During the same period Michigan
suffered a decline of 45 percent of its 2002 total, due in part to its sharp drop (61 percent) in foreign investment in the
manufacturing sector.
29 All FDI value is in 2011 dollars. The latest data available for FDI value is from 2007
30 FDI dollar value comparison with other benchmark states (Georgia, South Carolina and Virginia) are not available as the 2007 data on FDI value for these states are
suppressed by the U.S. Bureau of Economic Analysis to avoid disclosure of individual companies.
10
20
30
40
50
NC GA* MA MI PA SC* VA*
(in Billions)
2002 2007
$29
$31
$30
N/A
$29
$28
$46
$25
$36
$42
$26
N/A
$21
N/A
Source: U.S. Bureau of Economic Analysis
* Data for GA, SC and VA is suppressed.
7-1 Dollar Value of FDI, 2002 & 2007
(in 2011 dollars)
32
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
North Carolina has traditionally attracted signifi cant foreign direct investments from Europe. In 2007, nearly half of the
State’s FDI came from the member states in the European Union. In terms of dollar value, Germany provided the largest
amount of direct investment in North Carolina representing 18 percent of the state’s total FDI in 2007; followed by the
United Kingdom (15 percent). Measured by percentage growth over the 2002 – 2007 period, German investment in
North Carolina grew merely 7 percent while Switzerland has increased its investment in the state by 81 percent. During
the same period, North Carolina saw declined FDI infl ows from the Netherlands (65 percent), France (34 percent) and
United Kingdom (30 percent). North Carolina continues to attract foreign investment from regions all across the world.
During the 2002-2007 period, inbound FDI from Canada to the state rose 62.5 percent. Companies in Asia also increased
their investment in North Carolina with Japan topping the list. Investment received by the state from countries other than
Canada, Japan and EU members grew 44.5 percent.
In 2008, North Carolina ranked ninth nationally and second among benchmark states in the number of workers hired
by majority-owned U.S. affi liates (“foreign owned companies”). Approximately 206,700 workers in North Carolina were
employed by these foreign owned businesses in which a foreign investor or company held at least a 50 percent stake.
These businesses represented 4.8 percent of total employment in the state, third highest among comparison states,
behind Massachusetts (5.8 percent) and South Carolina (5.4 percent).
Between 2003 and 2008, employment by foreign owned companies in North Carolina grew 1.4 percent while Michigan
and South Carolina saw the greatest declines at -26.4 percent and -15.5 percent, respectively. Virginia had the highest
employment growth of 15 percent, followed by Pennsylvania (13 percent).
Others, 30%
Japan, 12%
United Kingdom, 15%
Switzerland, 4%
Netherlands, 4%
Germany, 18%
France, 4%
Canada, 13%
Source: U.S. Bureau of Economic Analysis
7-2 FDI in NC by Country, 2007
33
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
What Does this Mean for North Carolina Economic Development?
Foreign direct investment increases integration into the global economy. It encourages adoption of new technologies,
improves labor quality, expands international trade volume, and contributes to economic growth and job creation. The
U.S. continues to be the leading destination for foreign direct investment as it offers a stable and low cost business
environment to serve the world’s largest consumer market. North Carolina’s strategic geographic location provides foreign
companies easy access to customers and suppliers as well as opportunities to tap into the major U.S. markets. As the
global economy begins to recover and businesses start to invest again, North Carolina will face competition for foreign
investment from other states and countries. To retain and attract more foreign investors, North Carolina must continue to
enhance its competitive investment climate including tax structure, legal system, business regulations and fi nancing. In
addition, the State must devote resources to improve physical infrastructure to move people and goods. Improving human
capital through skill development in technical training, foreign language ability, and cultural understanding is essential for
North Carolina to thrive in the global economy. These combined efforts will further maximize the return on investment of
foreign fi rms in the State.
2003 2008
0%
2%
4%
6%
8%
US NC GA MA MI PA SC VA
3.8%
3.9%
5.1%
4.8%
4.4%
4.0%
5.9%
5.8%
4.4%
3.3%
4.0%
4.3%
6.8%
5.4%
3.8%
4.0%
Sources: U.S. Bureau of Economic Analysis and Bureau of Labor Statistics
7-3 Employment by Foreign Own Companies
2003 & 2008
(percentage of total employment)
34
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
Key Findings
• North Carolina continues to be ranked second, behind Virginia, among competitor states in state and local government
funded R&D expenditure.
• North Carolina ranks seventh in the United States for R&D performance in universities and colleges in 2007.
• A total of ten North Carolina counties receive in excess of $1 million in federal R&D contracts from the Department
of Defense.
Indicator Overview
Investments in research and development (R&D) increase productivity, boost economic growth, generate new products
and processes, and improve the quality of people’s lives. High degrees of R&D activity in a state show support for future
growth in knowledge-based industries. Prioritization of R&D among public or private goals can be ascertained when
proportionally compared to the Gross Domestic Product (GDP). The dollars spent on R&D can be examined for various
allocation segments including private industry, federal government, and academic institutions.
How Does North Carolina Perform?
Total North Carolina R&D expenditures continue to rise, growing by more than $2 million from 2006 to 2007. An estimated
75 percent of total North Carolina R&D expenditures were funded by businesses in 2007. The Federal Government was
the second largest supporter of total R&D (20 percent). The Federal Government was also responsible for funding a large
part of university conducted research and development, followed by the institutions themselves. North Carolina, compared
to all competitor states, had the highest amount of university conducted R&D support from businesses (13.6 percent).
Pennsylvania followed, with only 7.5 percent.
How much a state spends on R&D can be greatly affected by the size of their
economy. Consequently, variations in R&D expenditures by state may refl ect
differences in the size of a state’s economy, rather than true efforts in R&D.
To control for this, a ratio between R&D expenditures and state GDP, known as
R&D Intensity, is useful. North Carolina’s R&D intensity is below the national
average of 2.7, but still performs better than 31 states, ranking 19th. The
chart to the right illustrates R&D intensity of comparison states using revised
GDP fi gures from the Bureau of Economic Analysis. R&D is concentrated, with
ten states accounting for 64 percent of total U.S. R&D expenditures in the
top 20 states, including North Carolina, account for an additional 21 percent
or 85 percent of total US R&D. R&D expenditures represent approximately
1.7 percent of the North Carolina’s GDP which is comparable to some of the
benchmark states. Massachusetts, which ranks second to California for all
R&D performance, has a much higher ratio of R&D to GDP at 6.1 percent.31
R&D effectiveness can also be measured by the number of patents awarded in a state. Patents represent a return on
innovation and invention, thus it can be used to gauge successful R&D environments. North Carolina ranks in the middle
of competitor states, ahead of Virginia, South Carolina, Pennsylvania and Georgia in terms of patents awarded per 1,000
individuals in science and engineering occupations in 2008.
31 National Science Foundation, National Center for Science and Engineering Statistics. “Science and Engineering Indicators 2010”. January 2010. http://www.nsf.gov/
statistics/seind10/c4/c4s2.htm#s2
State Intensity
United States 2.7%
Massachusetts 6.9%
Michigan 4.5%
Pennsylvania 2.5%
Virginia 2.4%
North Carolina 2.3%
South Carolina 1.5%
Georgia 1.1%
8-1 R&D Intensity by State
(R&D as a Percent of GDP)
National Science Foundation
35
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
The Federal Government supports research through a number of policy measures, the most direct being the
implementation and funding of R&D that would not otherwise be conducted or fi nanced in the private sector.
The most recent data of federal obligations for R&D in North Carolina shows approximately 52 percent of funding from the
U.S. Department of Health and Human Services [8-2]. In 2007, Health and Human Services obligations were estimated
to make up 70 percent of total federal R&D obligations in North Carolina. The state has considerable obligations from
the Department of Health and Human Services in part because of the quality of academic research institutions in North
Carolina focused on the health sciences and medical fi elds. North Carolina has since expanded its capabilities to include
more defense related R&D. Following Health and Human Services, the Department of Defense, Department of Homeland
Security and the U.S. Agency for International Development make up another 40 percent of federal R&D obligations in
North Carolina.
North Carolina has attempted to attract more Federal R&D contracts from the Department of Defense and the
Department of Homeland Security due to the large and increasing military presence in the State. The top four counties
receiving the highest amounts of defense related R&D funding in 2010 were Wake, Durham, Cumberland, and
Pasquotank [8-3]. Cumberland County includes Fort Bragg, one of the largest military bases in the United States, and
Pasquotank County has a Coast Guard Air Station in Elizabeth City. Both Wake and Durham lack military bases, but
have numerous R&D institutions. Ten counties receive more than one million dollars in defense R&D contracts in North
Carolina. This funding helps support local economies and industries outside of the traditional metropolitan areas.
Other, 4%
Department of
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘃􀍕􅔀􀀃􀌃􀏰􏀄􀐹􃥄
Department of
Homeland Security, 6%
United States Agency for
􀀯􂼁􀅶􇘁􀆚􉨁􀄞􁸁􀆌􈰁􀅶􇘁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘁􀄂􀈁􀅯􆼀􀀃􀌀􀀘􁠁􀄞􁸁􀇀􌀁􀄞􁸁􀅯􆼁􀅽􇴁􀆉􈤁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨃􀍕􅔀􀀃􀌃􀏭􎴃􀏯􎼄􀐹􃤀
􀀘􁠁􀄞􁸁􀆉􈤁􀄂􀈁􀆌􈰁􀆚􉨁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌁􀅽􇴁􀄨􂠀􀀃􀌀􀀘􁠁􀄞􁸁􀄨􂠁􀄞􁸁􀅶􇘁􀆐􉀁􀄞􁸃􀍕􅔀􀀃􀌃􀏮􎸃􀏭􎴄􀐹􃤀􀀃􀍄
Department of Health and
􀀬􂰁􀆵􋔁􀅵􇔁􀄂􀈁􀅶􇘀􀀃􀌁􀆐􉀁􀄞􁸁􀆌􈰁􀇀􌀁􀅝􅴁􀄐􁀁􀄞􁸁􀆐􉀃􀍕􅔀􀀃􀌃􀏱􏄃􀏮􎸄􀐹􃥕
USAspending.gov
8-2 Federal R&D Obligations in North Carolina, by Selected Agency: FY 2010
36
Academic R&D, a critical innovation input and one of the State’s competitive advantages, is highly concentrated in the
Research Triangle region. In 2009, the three largest universities located in the Research Triangle Region – UNC-Chapel
Hill, Duke University, and North Carolina State University – accounted for over $1.8 billion, or 85 percent, in academic
R&D expenditures within the State. These expenditures contributed to North Carolina’s ranking among the top states
in academic R&D. Signifi cant activity also exists at other universities throughout North Carolina, including Wake Forest
University, NC A&T, UNC Charlotte, and East Carolina [8-4].
8-3 Federal Defense Contracts in R&D by County in North Carolina
(Fiscal Year 2010)
USAspending.gov
Duke U.
U. NC Chapel Hill
NC State U.
Wake Forest U.
NC A&T
􀁨􆠃􀍘􅠀􀀃􀌀􀁅􄔀􀀒􁈀􀀃􀌀􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹅
East Carolina U. $24,177
$28,540
$201,204
$380,571
$646,011
$805,021
$24,814
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
National Science Foundation
8-4 R&D Expenditures at North Carolina Academic Institutions, 2009
Map Created in February 2011
50
Miles
R&D Money Amount
Total Amount
0 - 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 - 10,000,000
10,000,001 - 50,000,000
37
The reputation for innovation associated with North Carolina’s universities and colleges is due in part to the fi nancial
support they receive for R&D from state and local governments. Among comparison states, North Carolina ranked second
behind Virginia (11.4 percent) with 10.5 percent of its academic R&D funding coming from state and local governments.
Both North Carolina and Virginia lead competitor states by at least fi ve percentage points in this metric. The North Carolina
General Assembly has a strong tradition of supporting research and development. One of its most recent investments
is the North Carolina Research Campus. Located in Kannapolis, the Research Campus is a public-private partnership
established to advance health and nutrition research. The Federal Government tends to support both private and public
institutions equally, whereas the State Government favors public institutions. Private industries typically support private
institutions’ R&D more than public institutions’ R&D efforts.
What Does this Mean for North Carolina Economic Development?
North Carolina should continue to encourage public-private partnerships to help fuel innovation and balance the benefi ts
and costs of research and development. The State should emphasize the dispersion of technology throughout the
State, such as rural area broadband, to encourage regional knowledge ecosystems, where networks of collaboration are
improved. Universities are likely to remain the center of successful R&D regions. Therefore, North Carolina should also
continue to support universities and develop new learning programs targeted at R&D opportunities, such as defense.
Research universities spark regional economic development through invention, innovation and technology transfer;
thus they create an educated work force ready to meet the demands of an increasingly knowledge based economy.
Additionally, universities themselves and the settings they provide attract smart and talented people to the area.32 R&D,
along with other social, economic, and technological factors, creates new knowledge and contributes to innovation and
the introduction of new goods, services, processes, and managerial practices.33 Continued R&D investment is critical to
North Carolina’s efforts to diversify its industrial base, increase productivity, and attract and retain innovative companies
and talented workers.
32 Anderson Economic Group, LLC. Et al. “Research and Development in the URC” An update to the 2010 Economic Impact Report. December 2010.
http://andersoneconomicgroup.com/Portals/0/upload/AEG_R&DUpdate_PUBLIC.pdf
33 National Science Foundation, National Center for Science and Engineering Statistics. “Science and Engineering Indicators 2010”. January 2010.
http://www.nsf.gov/statistics/seind10/c4/c4s1.htm
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
38
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
Key Findings
• In 2010 North Carolina, unlike the Nation, experienced an increase in venture capital funding.
• Out of total United States venture capital, 20 percent is contributed to the software industry, which is established and
growing in North Carolina compared to the Nation as a whole.34
• Federal funding of the SBIR/STTR Programs decreased substantially from 2009 to 2010 with North Carolina’s share
decreasing from $47 million to $3.5 million.
Indicator Overview
Stimulating entrepreneurial activity is an important and growing focus of economic development efforts throughout the
United States. Venture capital is critical for technology-based start-ups and is most commonly used to stimulate the
fl ow of equity to high-growth industries. The amount of venture capital available to companies is a predictor of potential
new products and services, job creation, and revenue growth in a state. The U.S. Small Business Administration’s Small
Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs require certain federal
agencies to set aside a percentage of their research and development (R&D) budgets for grants to small business. On
average, companies that receive SBIR/STTR funding signifi cantly out-perform similar companies that do not receive such
support.35
How Does North Carolina Perform?
Startup/seed capital is needed to get an entrepreneurial venture off of the ground. Businesses that typically
obtain startup capital are young companies that have not produced a product or service for commercial sale. The
companies are so new it may be diffi cult to obtain a commercial loan suffi cient for covering all related startup expenses.
In North Carolina, 8 percent of all venture capital in 2010 went to startup/seed projects [9-1]. While startup capital is
risky, it is critical for fostering an entrepreneurial environment. Most venture capital is available at the expansion and later
stages of development, which are considered more certain to provide profi ts. In 2010, the dollar value of venture capital
funds in North Carolina was greater in all development stages, except early stage, compared to 2009. Venture capitalists
have shifted investment decisions away from earlier stage ventures towards ventures in the expansion and later stages,
thus reducing risks. Since 2009, there has been a substantial increase in funding for these expansion and later stage
ventures.
34 Hardin, John and Harder, Chris. 2003. Tracking Innovation: North Carolina Innovation Index. North Carolina Board of Science and Technology,
North Carolina Department of Commerce. http://www.ncscitech.com/PDF/reports/ti_2003.pdf
35 BusinessFinance.com. Seed Capital. February 2008. http://www.businessfi nance.com/seed-capital.htm
2010 2009
Startup/Speed
Expansion
Early Stage
Later Stage
Startup/Speed
Expansion
Early Stage
Later Stage
47%
20%
27%
20%
35%
37%
8% 6%
PriceWaterhouseCoopers; National Venture Capital Association
9-1 NC Percent of Venture Capital by Stage of Development
39
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
In 2010, North Carolina businesses attracted approximately $456 million in venture capital funding, down from 2008,
but substantially higher than 2009 ($244 million). North Carolina’s share of national venture capital increased from 1.3
percent in 2009 to 2.1 percent in 2010. For the entire nation, California was the top state to receive funding in 2010 with
50 percent of total U.S. venture-backed investment. This is the third consecutive year California received 50 percent or
more of total U.S. venture-capital. Massachusetts was second, capturing 11 percent of total U.S. dollars. North Carolina
ranks 9th among all fi fty states, trailing competitor states Massachusetts (2nd), and Pennsylvania (7th). North Carolina
did have the highest dollar per deal ratio compared to all comparison states in 2010, with an average investment of $8
million for each deal.
9-2 Venture Capital Funds and Number of Deals, by Select State
State 2010 Venture Capital Investment Number of Deals Dollar per Deal
GA $333,351,000 63 $5,291,286
MA $2,372,657,300 351 $6,759,707
MI $151,558,700 33 $4,592,688
NC $456,256,200 57 $8,004,495
PA $508,438,200 153 $3,323,125
SC $20,715,000 8 $2,589,375
VA $375,436,300 51 $7,361,496
In recent decades, venture capital has played an instrumental role in supporting high-tech, high growth industries such as
information technology.36 Venture capital funding in the fourth quarter of 2010 was most likely to be spent on companies
in the software industry.37 Industrial/Energy 38 and Biotechnology were also highly rated industry options, comprising
about 30 percent of all venture capital investments. These industries are technology dependent and require substantial
capital in order to develop into mature fi rms.
Small businesses, which may not obtain funding through private venture capital, are granted venture funding from the
Federal Government through the SBIR/STTR programs. Despite larger benefi ts to society, small fi rms generally under-invest
in R&D, which is why the SBIR/STTR program goal of increasing R&D funding in small fi rms is valuable.39,40
Nevertheless , a steep decline in program funds occurred nationally as a result of spending cuts by the federal
government. In 2010, North Carolina was granted slightly more than $3.5 million down from $47 million in 2009. All
competitor states faced similar decreasing situations with South Carolina experiencing the largest decrease from the
previous year [9-3]. Prior to 2010, SBIR/STTR funding remained relatively steady across the nation, until sharp program-wide
decreases in 2010.
36 National Venture Capital Association and HIS Global Insight, “Venture Impact, The Economic Importance of Venture Backed Companies to the U.S. Economy.” 2009.
http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
37 PricewaterhouseCoopers and National Venture Capital Association, “MoneyTree Report, Q4 2010/Full-year 2010” January 2011.
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/fi lesource/exhibits/MoneyTree_Q42010_Full%20Year.pdf
38 PricewaterhouseCoopers and National Venture Capital Association, “MoneyTree Report, Q4 2010/Full-year 2010” January 2011.
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/fi lesource/exhibits/MoneyTree_Q42010_Full%20Year.pdf
39 Industrial/Energy is defi ned as “Producers and suppliers of energy, chemicals, and materials, industrial automation companies and oil and gas exploration companies.
Also included are environmental, agricultural, transportation, manufacturing, construction and utility-related products and services”.
https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=defi nitions
40 Small fi rms tend to under-invest in R&D because they receive considerably less benefi t (profi ts) than society (new products/services, knowledge externalities, economic
spillovers, etc.). G overnment can counter this by supporting research efforts that promise potential gains for society but are unlikely to yield immediate gains (profi ts) to
the innovating fi rm. Wallsten, S. 2000. “The R&D Boondoggle.” Regulation, Vol. 23, No.4, pp. 12-16. http://www.cato.org/pubs/regulation/regv23n4/wallsten.pdf
PriceWaterhouseCoopers; National Venture Capital Association
40
What Does this Mean for North Carolina Economic Development?
Without venture capital, many innovative companies in North Carolina will not realize their full growth potential.
Venture capital is highly concentrated in two regions in the United States: Silicon Valley and New England (Boston).
More entrepreneurs creating start-ups, sharing knowledge, and attracting venture capital funds exponentially increases
the prospect of North Carolina emerging as a vibrant incubator.41 Given North Carolina’s strength in research at its
universities and in the private sector, an emphasis should be placed on improving venture capital opportunities in the
State, particularly early-stage capital by further linking the private sector with research universities, as university based
research has signifi cant local spillovers. Universities and research institutions create technology transfer of new ideas
between entrepreneurs and encourage growth among start up ventures in new industries.42 More established industries
such as software and biotech continue to require venture capital funds for technological innovation. Given the presence
of these industries in the State, North Carolina has an opportunity in increasing investment and employment in these
industries. The more successful North Carolina continues to be in industries where a mature presence exists, the more
venture capital dollars the State is likely to attract for these industries and for new, emerging industries and fi rms. This
portfolio approach could increase the State’s standing as a venture capital hub over the long-term.
41 In general, entrepreneurs who start companies do not relocate but stay close to the source of their perceived competitive advantage. Feldman,M. 2003.
“The Emergence of Entrepreneurship Policy: Governance, Start-ups, and Growth in the U.S. Knowledge Economy.” Chapter 5, pg. 107. Edited by David Hart, 2003.
Cambridge University Press
42 Jaffe, Adam B. “Univesities and Regional Patterns of Commercial Innovation.” REI Review (1989).
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
$0
$50
$100
$150
$200
$250
$300
VA
SC
PA
MI
GA
MA
NC
2005 2006 2007 2008 2009 2010
U.S. Small Business Administration
Millions
9-3 SBIR/STTR Awards by State 2005 - 2010
41
Key Findings
• In 2009, North Carolina was at the national average with 43 percent of the State’s citizens not pursuing formal
education beyond high school.
• Between 2000 and 2009, North Carolina outperformed the national average and benchmark states in reducing the
percent of 25+ population having attained less than a high school graduation or equivalent (-7.0 points). North
Carolina also tied or outperformed all comparison states by increasing the percent of 25+ population having attained a
bachelor’s degree or higher (+2.4 points).
• In the 2008-2009 academic year, North Carolina trailed the national average in the number of graduate degrees
awarded in science and engineering fi elds.
Indicator Overview
Education is a key driver of economic prosperity. Educational attainment measures the highest education level completed
by an area’s population. Higher levels of education tend to lead to higher wages, improve a worker’s ability to adapt
to changing economic conditions and utilize new technologies, and are increasingly a prerequisite for employment in
knowledge-based industries.
How Does North Carolina Perform?
Overall, North Carolina is comparatively less educated than the nation as a whole and many benchmark states. In 2009,
the State trailed or tied national averages in all educational attainment categories except for Associate’s Degrees and
Some College/No Degree [10-1]. In addition, North Carolina trailed all benchmark states except for South Carolina for the
percent of population over twenty-fi ve years of age having attained a graduate degree. Only Georgia and South Carolina
had more people with less than a high school diploma or equivalent.
10-1 Educational Attainment by Degree Category, 2009
(Percent persons 25 years and older)
US NC GA MA MI PA SC VA
Less than a High School
Graduation or Equivalent
14.8% 15.6% 16.1% 11.1% 12.1% 13.2% 16.4% 13.4%
High School Graduation or
Equivalent
28.5% 27.3% 28.9% 26.3% 31.1% 37.7% 30.3% 25.4%
Associate’s Degree 7.5% 8.5% 6.4% 7.7% 8.2% 7.3% 8.4% 6.6%
Some College, No Degree 21.3% 22.0% 21.0% 16.7% 24.1% 16.6% 20.6% 20.6%
Bachelor’s Degree 17.6% 17.7% 17.6% 21.8% 15.2% 16.2% 15.9% 19.9%
Graduate or Professional
Degree(s)
10.3% 8.8% 9.9% 16.4% 9.4% 10.2% 8.4% 14.1%
However, North Carolina ranks high for improving educational attainment in two important categories. The State reduced
the percent of the 25+ population having attained less than a high school graduation or equivalent, from 22.6 percent
in 2000, to 15.6 percent in 2009, a decrease of 7.0 percentage points. Comparatively, the nation as a whole reduced
the percent of the 25+ population with less than a high school degree or equivalent by 3.7 percentage points over the
same period. Also, North Carolina increased the number of the 25+ population with a bachelor’s degree by 38 percent,
equating to 300,522 more bachelor’s degrees in 2009 than in 2000 and a 57 percent increase in graduate and
professional degrees (+196,118) [10-2]. During the same period, the United States increased educational attainment for
the 25+ population with a bachelor’s degree or higher by 35 percent.
INDICATOR 10: EDUCATIONAL ATTAINMENT
U.S. Census Bureau
42
Science and engineering education is an important indicator for economic development because the skills associated with
their education are needed in knowledge-based jobs. During the 2008-2009 academic year, North Carolina’s performance
was mixed. The State produced 18.7 science and engineering bachelor’s degrees and 2.8 science and engineering
master’s and doctorate degrees per 10,000 population [10-3]. North Carolina ranked higher than Georgia, Michigan,
South Carolina and the United States for awarded science and engineering bachelor’s degrees. However, the State trailed
all comparison states except for South Carolina and Georgia in terms of awarded master’s and doctorate degrees.
INDICATOR 10: EDUCATIONAL ATTAINMENT
0
10
20
30
40
50
60
US NC GA MA MI PA SC VA
25%
30%
38%
57%
43%
57%
15%
22%
11%
18%
18%
29%
19%
38%
24%
37% Bachelor’s Degree Graduate or Professional Degree
Integrated Postsecondary Education Data System, National Center for Education Statistics
10-2 Percent Change in Educational Attainment, 2000 - 2009
43
What Does this Mean for North Carolina Economic Development?
The growth of North Carolina’s economy is predicated on the capabilities of its workforce, and educational attainment is
a fundamental way of measuring those capabilities. North Carolina’s educational attainment levels, including conferred
science and engineering degrees, rank below the national fi gures and key benchmark states. This means North Carolina
employers could face challenges fi nding and hiring a highly educated workforce, particularly workers necessary for
knowledge-based industries. However, North Carolina’s documented progress suggests the State’s labor force is improving
more rapidly than the Nation as a whole and most benchmark states in many categories. Employers seek locations
producing and attracting a highly educated workforce. Continuing to target investment in education will enable North
Carolina’s population to move up the educational attainment ladder and continue to attract a workforce employers seek.
INDICATOR 10: EDUCATIONAL ATTAINMENT
Science & Engineering Bachelor’s Degrees
Science & Engineering Master’s and Doctorate Degrees
0
5
10
15
20
25
30
10.4
3.2
18.7
2.8
9.9
2.3
26.1
5.7
17.3
3.6
19.5
3.5
12.3
1.9
19.7
4.4
US NC GA MA MI PA SC VA
Integrated Postsecondary Education Data System, National Center for Education Statistics
10-3 Science & Engineering Degrees per 10,000 Population
2008 - 2009
44
INDICATOR 11: STATE GROSS DOMESTIC PRODUCT
Key Findings
• Between 2004 and 2009, North Carolina’s Real Gross Domestic Product (GDP) grew by 7.3 percent, greater than the
U.S. average and fi ve of the six comparison states.
• However, since the start of the recession (2007) Real GDP has fallen 4.5 percent.
• In 2009, North Carolina’s per capita real GDP was $38,847, slightly below the national per capita real GDP.
• In 2009, the Government was the leading contributor to the State’s GDP and replaced nondurable goods
manufacturing, which had been the leading contributor to the State’s GDP in 2007.
Indicator Overview
One of the most common ways to measure a state’s overall economic performance or strength is to look at state
gross domestic product (State GDP). The U.S. Bureau of Economic Analysis (BEA) defi nes GDP as a measurement
of a state’s output – the value added in production by the labor and property located in the state. State GDP is the
monetary value of all goods and services performed in a state in one year.
How Does North Carolina Perform?
In the years before the recession the State experienced signifi cant economic growth. In 2004, North Carolina’s Real GDP43
was $335.9 billion. Real GDP peaked in 2007 at $377.6 billion before declining to $360.5 billion in 2009. Despite the
decrease from 2007 to 2009 the State’s Real GDP grew by 7.3 percent from 2004 to 2009, greater than the U.S. average
of 4.7 percent and faster than all comparison states [11-1] except Virginia.
43 “Real” GDP is Gross Domestic Product adjusted for infl ation; stated in terms of a base year (2005).
8.0%
5.0%
2.0%
-1.0%
-4.0%
-7.0%
-10.0%
-13.0% US NC GA MA MI PA SC VA
Real GDP Real GDP Per Capita
4.7%
-0.1%
7.3%
-2.4%
1.0%
3.2%
0.9%
-12.4%
-11.3%
2.7%
0.9%
1.1%
-6.9%
8.0%
2.4%
-8.4%
U.S. Bureau of Economic Analysis
11-1 Percent Change in Real GDP and Real GDP Per Capita
2004 - 2009
45
11-2 Per Capita Real GDP, 2004 & 2009
(2005 dollars)
INDICATOR 11: STATE GROSS DOMESTIC PRODUCT
Per capita Real GDP by state is an important measure of prosperity for an area. It is calculated by dividing the Real GDP
of the state by the state’s population. In 2009, North Carolina’s per capita Real GDP was $38,437, down from $39,384
in 2004 [11-2]. The State’s per capita Real GDP was slightly less than the United States ($41,632) and signifi cantly less
than Massachusetts ($50,023) and Virginia ($46,609). During the same period(2004 to 2009) North Carolina’s per
capita Real GDP growth rate was -2.4 percent and behind the national average of -0.1 percent. It’s interesting to note
North Carolina’s Real GDP increased more than all but one benchmark state between 2004 and 2009, while Real GDP
per capita decreased faster than all but one benchmark state over the same period. This is a result of North Carolina’s
population increasing more rapidly than Real GDP. Even still, North Carolina had a smaller decline in Real GDP Per Capita
than South Carolina, Georgia, and Michigan over the 5 year period.
Government in North Carolina was the largest contributor to GDP over the course of the recession. In 2009, North Carolina
government accounted for 14.3 percent of the total State GDP, up from 12.9 percent in 2007. The fi nance and insurance
industry was also a major contributor to State GDP at 11.6 percent, up from 10.2 percent in 2007 [11-3]. Real estate and
nondurable goods manufacturing continued to be important industries for North Carolina, with both contributing over 10
percent to State GDP. Since 2004 the fi nance and insurance industry has seen the largest percentage point increase in its
contribution to State GDP. Finance and insurance’s portion of State GDP increased 1.3 percentage points from 2004
to 2009.
0
10000
20000
30000
40000
50000
60000
US NC GA MA MI PA SC VA
2004 2009
$41,675
$41,632
$39,384
$38,437
$39,577
$36,252
$49,560
$50,023
$37,040
$32,839
$38,687
$39,033
$33,128
$30,845
$45,538
$46,609
U.S. Bureau of Economic Analysis
46
2-Digit NAICS Industry 2009 % of State GDP 2007 % of State GDP 5 Year Trend 2004 to 2009
Government 14.3% 12.9% Increase
Finance and insurance 11.6% 10.2% Increase
Real estate and rental and leasing 10.5% 9.7% Increase
Nondurable goods manufacturing 10.1% 13.0% Decrease
Durable goods manufacturing 8.0% 8.7% Increase
Health care and social assistance 6.8% 6.2% Increase
Wholesale trade 6.0% 5.5% Increase
Retail trade 5.7% 6.0% Decrease
Profes

A Division of
The North Carolina Department of Commerce
P
S t r a t e g i c P l a n n i n g R
OLICY
& ESEARCH
2011 North Carolina
Economic Index
A Summary of North Carolina's Economic
Strengths, Challenges and Opportunities
Includes an overview of the recent economic recession
2011
North Carolina
Economic Index
Economic Index Report Staff
Meihui Bodane
Kristin Bunn
Michael Haley
Aubrey Incorvaia
Anna Lea
Yongjun Lei
Tammy Lester
Derek Ramirez
Christa Wagner Vinson
Jared Wiener
Report Authors
Kristin Bunn
Derek Ramirez
Report Editor
Jared Wiener
Direct questions or comments to:
Jared Wiener, Senior Economist
North Carolina Department of Commerce
Division of Policy Research and Strategic Planning
301 North Wilmington Street
4329 Mail Service Center | Raleigh, NC 27699-4329
Phone: (919)715-4199 | jwiener@nccommerce.com
Special thanks to Angela Marshall, Whitney Phillips and Roberta Rose
for the design and layout of this document.
June 2011
June 2011
Dear Economic Development Allies:
The North Carolina Department of Commerce believes long-term economic development is
predicated on the implementation of a set of strategies to develop North Carolina’s capacity
for sustained economic growth. The 2011 North Carolina Economic Index is a tool designed to
assist state leaders and economic development professionals with identifying, understanding
and capitalizing on North Carolina’s strengths, addressing its weaknesses, and developing
future economic opportunities.
The Index provides a detailed and objective snapshot of the state’s economy based on
16 indicators and 53 specifi c measures. Using the most recent available data at time of
publication, the report focuses on North Carolina’s performance against six comparison states
(Georgia, Massachusetts, Michigan, Pennsylvania, South Carolina and Virginia) and the United
States as a whole. Additionally, many indicators and measures provide data for the different
regions of the state.
In addition to specifi c economic data, the report provides information on how indicator results
may guide state economic development planning. The report’s policy implications serve as
a call to action for economic development professionals and policymakers throughout North
Carolina. The Index also provides an overview of key economic trends by showing changes
over fi ve years. Finally, the Index explores the recession’s impacts on North Carolina’s
economy and how it has affected trends within the State.
J. Keith Crisco
Secretary
Dale Carroll
Deputy Secretary
Stephanie McGarrah
Assistant Secretary
Policy, Research, and Strategic Planning Division
TABLE OF CONTENTS Economic Structure
EXECUTIVE SUMMARY .............................................................................. 1
OVERVIEW OF THE RECENT
ECONOMIC RECESSION ........................................................................... 5
Indicator 1: Population ................................................................................11
Indicator 2: Labor Force ...............................................................................14
Indicator 3: Industry Mix ..............................................................................18
Indicator 4: Occupational Mix .....................................................................21
Indicator 5: State Gross Domestic Product (GDP) .....................................25
Indicator 6: Labor Productivity ....................................................................28
Indicator 7: Energy .......................................................................................31
Indicator 8: Exports ......................................................................................34
Indicator 9: Foreign Direct Investment (FDI) ..............................................38
Indicator 10: Firm Growth ............................................................................41
Indicator 11: Research and Development (R&D) .......................................44
Indicator 12: Entrepreneurial and Small Business Capital .......................47
Indicator 13: Educational Attainment .........................................................50
Indicator 14: Earnings .................................................................................53
Indicator 15: Income Distribution ...............................................................56
Indicator 16: Healthcare Access and Cost .................................................58
SOURCES GUIDE ......................................................................................64
TABLE AND FIGURES
1-1 Population Growth, 2005-2010 .....................................................................................11
1-2 County Population Change by NC Economic Development Regions, 2000-2009 .....12
1-3 Percent of Population by Age Group, 2009 ...................................................................13
2-1 Growth in Labor Force and Employment, 2005-2010 ..................................................14
2-2 Labor Force Participation Rates, 2005 & 2010 ...........................................................15
2-3 Female Share of Employment, 2005 & 2009 ..............................................................16
2-4 Labor Force Participation Rate in North Carolina
by Age Group, 2000, 2005, & 2010 ..............................................................................17
3-1 Industry Type ...................................................................................................................18
3-2 North Carolina Employment by Industry Sector, 2005 & 2010 ...................................19
3-3 Change in the Manufacturing Industry 2005 - 2010 ...................................................20
4-1 Top Employed Occupations in North Carolina, 2010....................................................21
4-2 Top Earning Occupations in North Carolina, 2010 .......................................................22
4-3 Management, Professinal and Technical Occupations by North Carolina
Economic Development Region .....................................................................................23
4-4 Top 5 Growing Occupations by Economic Development Region, 2005-2010 ............24
5-1 Export Dollar Value, 2005 & 2010 ................................................................................25
5-2 NC Top Export Destinations Percentage Growth 2005-2010 ......................................26
5-3 North Carolina Top Ten Exports, 2005 & 2010 ...........................................................27
6-1 Average Industrial Price of Electricity, cents per KWh, 2004-2009 ............................29
6-2 Precent Generation in MW h Renewable Energy with
Hydroelectric Production, 2005 & 2009 .......................................................................29
6-3 Percent of State Renewable Portfolio by Energy Type, 2009 .......................................30
7-1 Dollar Value of FDI, 2002 & 2007 .................................................................................31
7-2 FDI in North Carolina by Country, 2007 ........................................................................32
7-3 Employment by Foreign Own Companies, 2003 & 2008 ............................................33
8-1 R&D Intensity by State ....................................................................................................34
8-2 Federal R&D Obligations in North Carolina, by Selected Agency; FY 2010 ................35
8-3 Federal Defense Contracts in R&D by County in North Carolina; FY 2010 .................36
8-4 R&D expenditures at North Carolina Academic Instututions, 2009 ...........................36
9-1 NC Percent of Venture Capital by Stage of Development ............................................38
9-2 Venture Capital Funds and Number of Deals, by Select State ....................................39
9-3 SBIR/STTR Awards by State 2005-2010 .......................................................................40
10-1 Educational Attainment by Degree Category, 2009 .....................................................41
Economic Structure
10-2 Percent Change in Educational Attainment, 2000-2009 ............................................42
10-3 Science & Engineering Degrees per 10,000 Population, 2008-2009........................43
11-1 Percent Change in Real GDP and Real GDP Per Capita, 2004-2009 .........................44
11-2 Per Capita Real GDP, 2004 & 2009 ..............................................................................45
11-3 Top Ten Industries Contributing to North Carolina’s GDP, 2009 .................................46
12-1 Labor Productivity, 2004 & 2009 ..................................................................................47
12-2 Percent Change in Labor Productivity, 2004-2009 ......................................................48
12-3 North Carolina Labor Productivity Growth and Components
by Select Industries 2004 - 2009 ..................................................................................48
13-1 Percent Change in Firms, By State 2005-2009 ............................................................51
13-2 Firms by Economic Development Region ......................................................................52
14-1 Median Household Income, 2004 & 2009 ...................................................................53
14-2 Median earnings in the Past 12 Months of Full-Time Year-Round Workers
16 and Older in 2009 .....................................................................................................54
14-3 Average Weekly Wage, Private Sector, 2005 & 2010 ..................................................55
15-1 Percent of Tax Returns by Income Category, 2008 ......................................................56
15-2 North Carolina Precent of Total State Adjusted Gross Income Returns
Attributed to Income Category, 2004 ............................................................................56
15-3 North Carolina Percent of Total State Adjusted Gross Income Returns
Attributed to Income Category, 2008 ...........................................................................56
15-4 Project Per Capita Income in NC Counties ....................................................................57
16-1 2010 North Carolina Mortality Rankings, by County ....................................................59
16-2 Average Percent of Persons Under 65 Years of Age Not Covered
by Health Insurance, 1999-2009 .................................................................................60
16-3 Percent of North Carolinians Under 65 Years of Age Not Covered
by Health Insurance, 1999-2009 ..................................................................................60
16-4 Percent of Private Sector Establishments That Offer Health Insurance
to Employees, by Firm Size, 2009 .................................................................................61
16-5 North carolina Health Insurance Premiums, by Firm Size
(Number of Employees), 2009 .......................................................................................62
16-6 Percent of North Carolina Private-Sector Establishments that Offer
Health Insurance by Firm Size, 2000 versus 2009 .....................................................62
TABLE AND FIGURES
1
EXECUTIVE SUMMARY A summary of North Carolina’s Economic
strengths, challenges, and opportunities
WHAT IS THE 2011 NORTH CAROLINA ECONOMIC INDEX?
The 2011 North Carolina Economic Index is a tool created to assist the State’s economic development leaders in
capitalizing on North Carolina’s economic strengths and addressing its weaknesses. The Index provides a snapshot of
how the state is performing based on 16 economic indicators and 53 specifi c measures. Using the most current data
available at the time of publication, the indicators track North Carolina’s performance over time to provide an objective,
long-term evaluation of the State’s economy. North Carolina is compared to six states (Georgia, Massachusetts, Michigan,
Pennsylvania, South Carolina and Virginia) and the United States as a whole. Comparison states were selected based on
the following characteristics: Georgia, South Carolina and Virginia represent Southeastern geographic competitor states;
Michigan and Pennsylvania are comparable manufacturing states; and Massachusetts is a leading technology state.
The Index also includes an analysis section on the impact of the recent recession on North Carolina workers, businesses,
industries and families. Key measures evaluated include: state and national unemployment rate; county unemployment;
industry employment; foreclosures; and home sales. In this section, each measure analyzes data from December 2007,
the offi cial start of the recession, to the latest month data is available, January 2011. Even though the national recession
offi cially ended in June 2009, it’s impacts are still being felt.
SUMMARY OF INDICATOR FINDINGS
The 16 economic indicators fall into six broad economic categories: Demographic Change; Transitioning Economy;
Productivity; Global Economy; Innovation; and Shared Prosperity. Highlighting the complex and interrelated nature of the
State’s economy, many of the indicators could easily fall into several of the categories. Each category plays a prominent
role in North Carolina’s economy and affects almost every economic outcome. Together, the indicators form a broad
foundation for understanding North Carolina’s economic strengths, weaknesses, challenges and opportunities.
Demographic Change: Many economic indicators, such as unemployment rates or output growth, are hard to predict
in the long-term. Demographic developments are different. Although demographic surprises occur, major trends tend to
build slowly and are discernible in advance.1 North Carolina’s changing demographic landscape is no exception. As North
Carolina experiences demographic change, economic development professionals will need to ensure that the state labor
force has the right mix of skills, appropriate business and social services are available, and necessary infrastructure such
as roads, utilities, and schools are in place.
• North Carolina is the 10th largest state. North Carolina currently ranks as the 10th largest state in the country with
a population of 9,535,483 according to the 2010 U.S. Census. Since the 2000 Census, the State experienced a
population growth of over 18 percent. A major reason for the State’s population growth is the signifi cant increase in
people migrating from other regions of the United States or foreign countries.
• U.S. and North Carolina labor force has declined since 2005. Since 2005 the Nation has experienced a decline
in the labor force. Similarly, North Carolina’s labor force has declined by 2.1 percent between 2005 and 2010.
Nearly 58 percent of North Carolina’s population is between the ages of 20 and 64, and workers aged 55 and
above constitute a growing segment of the workforce. On January 1st of 2011, the oldest of the Baby Boomer
generation began turning 65.2 Every day since then and for the next 19 years, about 10,000 more people will turn
65. This segment of the population is also increasingly visible in the workforce, boosting their labor force
participation rate from 33.6 percent in 2000 to 38.2 percent in 2010.
Transitioning Economy: North Carolina’s economy is transitioning from traditional labor-intensive industries (e.g. textiles,
furniture, etc.) to knowledge-based or service-related industries. While this transition is not new, the recession has served
to accelerate the transformation. The transition of North Carolina’s economy suggests the need to continue workforce
training and redevelopment opportunities for displaced manufacturing workers. Employment trends should be used to
gauge which industries are growing or contracting and to determine resource allocation for infrastructure improvements,
workforce development, and may be used for developing targeted economic incentives.
1 Little, Jane Sneddon and Triest, Robert K. “Seismic Shifts: The Economic Impact of Demographic Change. An Overview.” Federal Reserve Bank of Boston, Conference
Series 46. June 2001.
2 Passel, Jeffrey and D’Vera Cohn. (2008). Baby Boomers Approach Age 65 – Glumly: Survey Findings About America’s Largest Generation [Executive Summary].
Pew Research Institute. http://pewresearch.org/pubs/1834/baby-boomers-old-age-downbeat-pessimism
2
EXECUTIVE SUMMARY
• North Carolina employment is concentrated in four industries. Ranked by employment size, North Carolina’s four
largest industries are: government; health care and social assistance; retail trade; and manufacturing. These industries
account for more than 55 percent of employment in the State. Like most of the country, employment in manufacturing
is signifi cantly declining. The manufacturing industry has lost over 137,000 workers since 2005.
• Occupations with the most workers often pay low wages. The top fi ve North Carolina occupations in terms of
employment are: offi ce and administrative support; sales; food preparation and serving; production; and transportation
and materials moving. Each of these occupations earns less than $31,000 annually. While managerial, professional
and technical occupations in the state are growing signifi cantly, the vast majority of these jobs are located in North
Carolina’s urban regions.
• Health care occupations are growing across North Carolina. All seven of the State’s economic development regions
are experiencing signifi cant growth in community and social services occupations, health care support occupations,
and health care practitioners and technical occupations.
Productivity: Productivity represents the amount of output per unit of input. In general, as labor productivity increases
output grows. It also provides a direct measure of a state’s competitive position over time. State output, measured by
real gross domestic product (Real GDP), is the monetary value of all goods and services performed in a state adjusted for
infl ation. A productive labor force and an effi cient energy system are two key factors in North Carolina’s ability to sustain
economic output and promote future growth. New economic development projects, the expansion of existing businesses,
and increased production are impacted by the cost, availability and reliability of energy.
• North Carolina’s Real GDP grew faster than U.S. North Carolina’s Real GDP growth rate between 2004 and 2009
exceeds that of the Nation and all comparison states except Virginia. The government was the leading contributor
to the State’s Real GDP in 2009, followed closely by fi nance and insurance, real estate and rental and leasing, and
nondurable goods manufacturing.
• North Carolina labor productivity is growing faster than U.S. The State’s labor productivity is growing faster than the
U.S. average. North Carolina’s growth in labor productivity is driven by a variety of industry sectors across different
segments of the economy. Innovation and technology are key determinates of labor productivity growth.
• North Carolina continues to be a leader in competitive industrial electricity prices. However, to remain competitive,
North Carolina must continue to invest in new, effi cient energy sources. To this end, North Carolina has enacted a
Renewable and Effi ciency Portfolio Standard (REPS). In 2009 North Carolina’s percent renewable production, including
hydroelectric, was below the national average but above all competitor states except Massachusetts.
Global Economy: An important indicator of economic health is the degree to which a state is engaged in the global
economy. Globalization will only increase in the foreseeable future, so economic development professionals should
work to ensure North Carolina continues to engage in the global economy. North Carolina’s long-term economic
growth depends on expanding and diversifying exported industry sectors. The State’s ability to compete for national
and international export markets is critical for the retention and growth of employment opportunities. Foreign direct
investment (FDI) is an important indicator of a state’s ability to attract foreign investors and is one of the key determinates
of a region’s ability to attract new technologies, capital, workforce skills, global connections and job opportunities.
• North Carolina’s dollar value of exports continues to grow. Canada remains the State’s top export destination, but
exports to China are experiencing the most growth. North Carolina’s top two export commodities are chemicals and
machinery.
• Foreign direct investment has increased. FDI infl ows to North Carolina grew 5.9 percent from 2006 to 2007. The vast
majority of FDI in the State comes from Europe. Asian countries are also very interested in North Carolina, with Japan
topping the list in FDI. Approximately 206,000 workers in North Carolina are employed by foreign owned companies.
A summary of North Carolina’s Economic
strengths, challenges, and opportunities
3
EXECUTIVE SUMMARY
Innovation: The creation and adoption of new products, services and business models is a fundamental driver of the
State’s economic and social prosperity in the 21st century. A vibrant entrepreneurial economy is typically characterized
by a high rate of business turnover, including both fi rm openings and closings. Investments in research and development
(R&D) increase productivity, boost economic growth, generate new products and processes, and improve the quality of
people’s lives. Available venture capital to companies is a predictor of potential new products and services, job creation
and revenue growth in a state.
• Amount of venture capital in North Carolina is increasing. North Carolina’s share of national venture capital increased
from 1.3 percent in 2009 to 2.1 percent in 2010.
• Education services sector had high number of fi rms. Looking at fi rms of all sizes and all ages, North Carolina’s
economic sector with the most fi rms in 2008 was the Education Services industry sector, with 15 percent of the total
share of fi rms.
• Academic R&D is concentrated in Research Triangle. Academic R&D, a critical innovation input and one of the State’s
competitive advantages, is highly concentrated in the Research Triangle Regional Partnership (RTRP) region. In 2009,
the three largest universities located in the Research Triangle area – UNC-Chapel Hill, Duke University, and North
Carolina State University – accounted for over $1.8 billion, or 85 percent, in academic R&D expenditures within
North Carolina.
• Several counties received large amounts of DOD contracts. Ten North Carolina counties received in excess of
$1 million dollars in federal R&D contracts from the Department of Defense in 2010.
Shared Prosperity: North Carolina’s economic transformation has brought many benefi ts to the State — new jobs and
opportunities, international recognition as a business location, and rapid population growth — but it has not been painless
and many successes have not been widely - shared. Healthy economies generate opportunities for individuals and
households to increase incomes. As the State continues its economic transition, economic development leaders must
continue to focus on expanding high wage industries and dedicate resources to provide training opportunities and improve
the education levels of the labor force for people across North Carolina.
• Percent of North Carolina population with bachelor’s degree or higher is increasing faster than U.S. The State is
improving faster than the national average in the percent of the population 25 years of age or more (25+) having a
bachelor’s degree or higher education. However, North Carolina was equal to the national average with 43 percent
of the State’s citizens not pursuing formal education beyond high school.
• North Carolina’s median household income is 84 percent of U.S. average. North Carolina’s median household income
is the second lowest among the comparison states. The State’s urban economic development regions (Research
Triangle, Charlotte, and Piedmont Triad) have the highest average weekly wages.
• Per capital income differs for rural and urban areas. Per capita income across counties shows relatively stark
differences between rural and urban parts of North Carolina. Mecklenburg, Wake and Orange counties have the
highest concentration of wealth.
• Many North Carolinians do not have health insurance. Nearly 18 percent of North Carolinians less than 65 years of
age were not covered by health insurance between 1999 and 2009. In 2009 only 54 percent of businesses with fewer
than 100 employees offered health insurance to their employees in North Carolina.
A summary of North Carolina’s Economic
strengths, challenges, and opportunities
4
CONCLUSION
Economic development is a long term investment in the future of North Carolina. In the short-term, the State faces a set
of historical economic challenges the Department of Commerce and the economic development community must move
to address. However, to remain competitive, North Carolina must not lose sight of its long-term strengths, challenges and
opportunities. The State continues to attract people and businesses, and the productivity of its labor force continues
to improve. North Carolina’s economic success is evident in the increase of the State’s Real Gross Domestic Product,
its ability to create new fi rms (small and large) and its expanding export market. These successes are signifi cant, but
challenges remain. Despite signifi cant historical investment in education, North Carolina must continue to strengthen
its “human capital” through basic education and workforce development. Also, economic opportunity for all North
Carolinians, regardless of income level or geographic location, should continue to be an essential goal of the State’s
economic development policy. This Index can be used to help North Carolina’s economic development leaders make policy
and resource allocation decisions to leverage the State’s successes and mitigate its challenges.
EXECUTIVE SUMMARY
5
Similar to the global and national economies, North Carolina is recovering from a recession. According to the National
Bureau of Economic Research, the United States entered a recession in December 2007. Employment numbers suggest
North Carolina followed in February 2008. Employment and production continued to fall throughout 2008 and 2009.
In late 2009 the economy started to stabilize and begin a slow recovery with the offi cial end of the national recession
being June 2009. The end of the recession marks the low point in the economic decline, it does not mark a return to
pre-recession economic levels. According to several key economic indicators, the economy is showing signs of returning
to pre-recession levels, but the path will be long. The following overview analyzes the impact of the recent recession on
unemployment rates, industry employment trends, state employment trends, household fi nances, and the housing market.
UNEMPLOYMENT RATES AND INDUSTRY EMPLOYMENT TRENDS
After the recession started in December 2007, North Carolina’s unemployment rate jumped from 5.0 percent to a high
of 11.4 percent on a seasonally adjusted basis in February 2010. Over the same time period, the Nation’s unemployment
rate increased from 5.0 percent to 10.1 percent.
North Carolina’s unemployment rate started to fall after February 2010 to the current level of 9.7 percent (March 2011).
The drop in the unemployment rate of 1.7 percentage points is signifi cant, but the largest contributing factor was the
shrinking of the labor force, not the employment of additional workers. While employment has increased by 6,200 during
this time, the labor force (people working or actively looking for work) has decreased by nearly 79,000. The magnitude of
the labor force reduction far exceeds that of employment increases. These two factors have worked together to reduce
the number of people considered unemployed by 85,000. As public perception of the job market improves, the size of the
labor force will likely increase as more people begin to actively look for jobs. In general, this infl ux is likely to increase not
only the size of the labor force but also the number of people considered unemployed. Therefore, improvement in the job
market may correspond with a temporarily static or even increasing unemployment rate.
OVERVIEW OF THE RECENT ECONOMIC RECESSION
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
U.S.
N.C.
Dec. 07
Mar. 08
Jun. 08
Sep. 08
Dec. 08
Mar. 09
Jun. 09
Sep. 09
Dec. 09
Mar. 10
Jun. 10
Sep. 10
Dec. 10
Mar. 11
N.C. Employment Security Commission
Unemployment Rate, Dec. 2007 - Jan. 2011
6
OVERVIEW OF THE RECENT ECONOMIC RECESSION
In addition to considering the size of the labor force with the traditional unemployment rate, an alternative measure
of unemployment exists. This measure captures more than people working and those actively searching for work. An
alternative unemployment rate3 can be used that includes both marginally attached workers and workers who work part-time
for economic reasons. Marginally attached workers are workers that have looked for employment in the last 12
months, but haven’t searched for work in the last 4 weeks. Workers that work part-time for economic reasons are workers
that are working less than 35 hours a week and desire full time employment, but cannot fi nd full time employment. The
graph below shows the U6 unemployment rate for North Carolina from 2004 to 2010. Note that the U6 unemployment
rate has not experienced the same decline seen in the “regular” unemployment rate from 2009 to 2010. All years
comprised of the average of the previous four quarters.
3 The alternative unemployment used in this analysis is more formally known as U6, calculated by the Bureau of Labor Statistics on a quarterly basis.
2004
2005
2006
2007
2008
2009
2010
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Alternative Unemployment Rate
U.S. Bureau of Labor Statistics
North Carolina Alternative Unemployment Rate,
2004 -2010
7
Employment impacts related to the current recession are not equally distributed among all industries.4 However,
job losses are occurring in both traditional and knowledge-based sectors. According to the following table, nonfarm
employment5 in North Carolina decreased 7.4 percent (-308,100 jobs) between December 2007 and January 2011.
Nearly a third (99,300) of the nonfarm jobs lost since December 2007 were in the Manufacturing industry. Only
Government and Education & Health Services have added employment since the start of the recession. In the last four
months industry employment has shown improvement with 4 sectors adding a total of 16,000 jobs.
Since the start of the recession, three industry sectors accounted for nearly 80% of the job loss by sector in North
Carolina: Manufacturing (-99,300); Construction (-85,900); and Trade, Transportation and Utilities (-60,300). Industries
that experienced modest employment losses (between 5,000 and 20,000) include Other Services, Professional and
Business Services, Leisure and Hospitality, and Financial Activities. Education & Health Services and Government both
experienced slight employment growth. However, over the last four months these two sectors have experienced the
largest job losses, -11,100 and -31,500 respectively.
4 Industry employment data from the U.S. BLS is considered total employment (full, part time, and temporary).
5 Total number of paid workers of any business, excluding the following employees: proprietors, the unincorporated self-employed, unpaid volunteer or family workers,
farm workers, and domestic workers. Government employment covers only civilian employees; military personnel are excluded. The total non-farm payroll accounts for
approximately 80% of the workers who produce the entire gross domestic product of the United States. (U.S. BLS)
Industry Sectors Jan. 11
Employment
Since Start of Recession
(12/07 - 01/11)
Last 4 Months
(09/10 - 01/11)
Change % Change Change % Change
Mining & Logging 5,700 (1,200) -17.4% (200) -3.4%
Construction 165,800 (85,900) -34.1% (5,500) -3.2%
Manufacturing 433,100 (99,300) -18.7% 500 0.1%
Trade, Transportation, & Utilities 719,800 (60,300) -7.7% 5,700 0.8%
Information 68,000 (4,200) -5.8% (3,200) -4.5%
Financial Activities 202,100 (10,100) -4.8% 2,800 1.4%
Professional & Business Services 489,000 (17,600) -3.5% 7,600 1.6%
Education & Health Services 533,600 800 0.2% (11,100) -2.0%
Leisure & Hospitality 390,900 (14,200) -3.5% (3,000) -0.8%
Other Services 156,900 (18,600) -10.6% (2,400) -1.5%
Government 696,500 2,500 0.4% (31,500) -4.3%
Total Nonfarm Employment 3,861,400 (308,100) -7.4% (40,300) -1.0%
OVERVIEW OF THE RECENT ECONOMIC RECESSION
U.S. Bureau of Labor Statistics
North Carolina Nonfarm Employment Trends by Industry
8
OVERVIEW OF THE RECENT ECONOMIC RECESSION
OVERALL STATE AND LOCAL EMPLOYMENT
An analysis of employment by industry sector excludes a signifi cant portion of the population - such as proprietors,
unincorporated self-employed, unpaid volunteer or family workers, farm workers, and domestic workers, who are not
included in the sector employment count. To give a full overview of state and local employment, this section examines
the total number of people employed in the State of North Carolina. From December 2007 to January 2011 more
than 309,000 people lost their jobs. Most of job loss occurred between December 2007 and December 2009. Since
December 2009 employment has slowly increased. The largest employment increase since the onset of the recession
peaked in April 2010 and was the result of hiring temporary workers for the 2010 Census.
In many communities across the State, workers continue to struggle to fi nd jobs. In January 2011, the 12 month average
unemployment rate for each county in North Carolina was an average of 5.4 percentage points higher than it was in
December 2007 at the start of the recession. This does not count “discouraged” workers who want jobs, but have not
looked for employment in the last 4 weeks.
Dec. 07
Apr. 08
Aug. 08
Dec. 08
Apr. 09
Aug. 09
Dec. 09
Apr. 10
Aug. 10
Dec. 10
4,400,000
4,350,000
4,300,000
4,250,000
4,200,000
4,150,000
4,100,000
4,000,000
3,950,000
3,900,000
3,850,000
N.C. Employment Security Commission
North Carolina Employment, Dec. 2007 - Jan. 2011
9
OVERVIEW OF THE RECENT ECONOMIC RECESSION
Not all areas experienced the same change in unemployment over the course of the recession. The following graph
shows the economic development regions and tier unemployment rates at their recessionary high and current levels.
Unemployment has not declined signifi cantly since its peak during the recession. All categories experienced their
unemployment rate peak in March of 2010 except for the NC Southeast region and the Tier 3 counties, which experienced
their highest unemployment rate in April 2010. Tier 1 counties experienced the highest peak unemployment rate, 13.3
percent. The RTRP region had the lowest rate, while the Charlotte region has experienced the largest post-recession
decline, 1.5 percentage points.
14%
12%
10%
8%
6%
4%
2%
0
Advantage
West
􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹒
Regional
NC Eastern NC
NorthEast
NC
SouthEast
Piedmont
Triad
Research
Tri.
Regional
Tier 1
Maximum
Current
Tier 2 Tier 3
1. Unemployment Rates are 12-month averages
􀀘􁠁􀄂􀈁􀆚􉨁􀄂􀈀􀀃􀌁􀅝􅴁􀆐􉀀􀀃􀌁􀄨􂠁􀆌􈰁􀅽􇴁􀅵􇔀􀀃􀌁􀄐􁀁􀄂􀈁􀅯􆼁􀄐􁀁􀆵􋔁􀅯􆼁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘁􀆐􉀀􀀃􀌁􀄏􀼁􀄂􀈁􀆐􉀁􀄞􁸁􀄚􁨀􀀃􀌁􀅽􇴁􀅶􇘀􀀃􀌀􀁅􄔃􀍘􅠀􀀒􁈃􀍘􅠀􀀃􀌀􀀜􁰁􀅵􇔁􀆉􈤁􀅯􆼁􀅽􇴁􀇇􌜁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌀􀁞􅸁􀄞􁸁􀄐􁀁􀆵􋔁􀆌􈰁􀅝􅴁􀆚􉨁􀇇􌜀􀀃􀌀􀀒􁈁􀅽􇴁􀅵􇔁􀅵􇔁􀅝􅴁􀆐􉀁􀆐􉀁􀅝􅴁􀅽􇴁􀅶􇘀􀀃􀌁􀄚􁨁􀄂􀈁􀆚􉨁􀄂􀉓
Source: Calculations based on N.C. Employment Security Commission data
Percentage Point Change in 12 Month Unemployment Rate Average from Dec. 2007 to Jan. 2011
Highest Recessionary Unemployment Rate Compared to Present Rate 1
Map Created March 2011
State’s seasonally adjusted unemployment rate difference from December 2007 to Januarly 2011 was 4.8 percentage points.
Unemployment
Percentage Point Increase
2.8% - 3.6%
3.61% - 4.8%
4.81% - 6%
6.01% - 8.45%
10
HOUSEHOLD FINANCES AND THE HOUSING MARKET
Not surprisingly, the recession and associated loss of jobs signifi cantly impacted families. Household fi nances were
negatively impacted by the simultaneous decline in wealth associated with the decrease in housing and stock values
and deterioration in the job market. According to the latest forecasts prepared by Dr. Michael Walden, the William Neal
Reynolds Distinguished Professor of Economics at North Carolina State University, income and consumer spending
declined signifi cantly during the recession and continues to be an issue. While the downward trend was less pronounced
in the latter half of 2010, it is expected to continue for the near future. The decreased consumer wealth continues to
have a depressing effect on retail sales. “Sales in 2010 are tracking sales in 2009 but are still well below those in the
pre-recessionary year of 2007.”6
A key driver of the recession was the housing market. The “housing bubble” built up earlier this decade ultimately led
to the “housing bust” of plummeting sales and weak prices over the past four years. In 2010, there were over 48,000
foreclosure fi lings in the State, an increase of nearly 31 percent from the year before.7 On a positive note, home
foreclosures in North Carolina for December 2010 through February 2011 were all lower than their levels from a year ago.
The number of home foreclosure notices in December declined 15 percent from the same month a year ago.
Recently released data from the North Carolina Association of Realtors shows home sales in February 2011 are up 2
percent from the year before (4,782 units sold compared to 4,687). In fact, since the beginning of 2010, the only months
where home sales were below the level from the same month in the previous year was from July 2010 to November 2010.
Existing Home Sales in North Carolina
Jul. 10 Aug. 10 Sep. 10 Oct. 10 Nov. 10 Dec. 10 Jan. 11 Feb. 11
Units Sold 6,772 6,533 6,219 5,712 5,387 6,507 4,750 4,782
% Change Prev. Month -28.8% -3.5% -4.8% -8.2% -5.7% 20.8% -27.0% 0.7%
% Change Year Ago -19.0% -15.7% -16.1% -26.7% -28.3% 10.2% 8.2% 2.0%
CONCLUSION
The impacts of the recent recession are still being felt and signifi cant economic challenges confronting the state will
continue for the foreseeable future. Existing economic development efforts and programs designed to help address
recession related issues, such as the heightened unemployment rate, job losses in key statewide industries, and
weak housing sales are increasingly important. Still, North Carolina must not lose sight of its long-term economic
strengths, challenges and opportunities. The long-term impacts resulting from solutions created to deal with short-term
problems should be strongly considered before any decisions are made. While the overall impacts of the recession
are unquestionably damaging to North Carolinians, it provides North Carolina with the opportunity to realign resources
and programs. The State has the potential to exit the economic crisis stronger and in a more competitive position, both
nationally and globally.
6 Dr. Michael L Walden. “The North Carolina Economic Outlook.” Winter 2010.
7 Data from Realty TRAC
OVERVIEW OF THE RECENT ECONOMIC RECESSION
N.C. Association of Realtors
11
Key Findings
• North Carolina ranks as the 10th largest state in the United States with a population of 9,458,888.
• Since 2005, the State experienced the highest growth rate (9.3 percent) among comparison states.
• The State’s population growth is primarily due to net migration. Fifty percent of the growth is attributable to individuals
moving to North Carolina from other states.
• From 2000 to 2009, all seven economic development regions in North Carolina demonstrated positive
population growth.
• Net migration is the leading factor contributing to population growth in all regions except for the Eastern and
Southeast Regions.
Indicator Overview
Changes in population have social and economic implications that infl uence business-location decisions, infrastructure
demands and service requirements. North Carolina’s population experienced substantial growth over the past decade due
to people moving to the State from other states or countries (positive net migration). Population growth is considered an
indication of economic opportunity as people often move to regions where there are jobs.
How Does North Carolina Perform?
North Carolina is ranked as the 10th largest state in the country with a resident population total of 9,458,888. The State
recorded the highest rate of growth (9.3 percent) among comparison states during the 5-year period ending in 2010 [1-1].
The state’s population growth rate was more than two times the national average. Georgia, South Carolina and Virginia, all
Southeastern states, experienced population growth in excess of 5 percent over the same time period.
INDICATOR 1: POPULATION
-2%
0%
2%
4%
6%
8%
10%
US NC GA MA MI PA SC VA
4.5%
9.3%
9.0%
2.8%
-1.6%
1.7%
8.1%
5.4%
U.S Census Bureau
1-1 Population Growth, 2005 - 2010
12
INDICATOR 1: POPULATION
Between 2000 and 2009, North Carolina’s population increased by more than 1.3 million [1-2]. Three components make
up population growth: 1) natural growth - the excess of births over deaths; 2) in-migration - the movement of people from
another state to North Carolina; and 3) immigration - the movement of people from outside the country to North Carolina.8
North Carolina’s population growth is due primarily (66.0 percent) to net migration (people who moved into N.C. less those
who moved out). Most of this growth (85 percent) occurred in counties linked to a municipality of at least 50,000 people.
Sixteen percent of the overall growth is attributable to immigration and 50 percent is attributable to individuals moving to
North Carolina from other states.
Over the same time period, all seven economic development regions in North Carolina demonstrated positive population
growth. The Charlotte and Research Triangle regions each experienced an increase in population of more than 445,000
people [1-2]. These two regions account for 67 percent of the State’s population growth (902,455 people). Net migration
is the leading factor contributing to population growth in all regions except for the Eastern and Southeast Regions.
1-2 County Population Change by NC Economic Development Regions, 2000-20099
Region Population Change % Natural Increase % Net Migration
Advantage West 73,779 5.9% 94.1%
Charlotte Region 445,830 30.3% 69.7%
Eastern Region 71,443 78.9% 21.1%
Northeast Region 17,602 25.0% 75.0%
Southeast Region 117,745 51.6% 48.4%
Piedmont Triad Region 164,492 37.3% 62.7%
Research Triangle Region 456,625 29.7% 70.3%
North Carolina Total 1,347,516 34.0% 66.0%
The United States’ population is aging. On January 1st of 2011, the oldest of the Baby Boomer generation began turning
65. Every day since then and for the next 19 years, about 10,000 more will cross that threshold daily.10 North Carolina’s
population age breakdown nearly matches the United States, implying the Baby Boomer retirement trend will impact
the State similarly to the US as a whole [1-3]. In 2009 in North Carolina, Baby Boomers accounted for an estimated
2.4 million people, or 26% of the State’s total population. As this segment of the population ages, smaller, more recent
generations will be required to support a growing elderly population. However, the State’s workforce should remain a
robust size for the next several decades, considering more than half (53%) of North Carolina’s population is between
the ages of 25 and 64 and the rate of people migrating in from other states ranks 7th in the nation. Proportionally,
Pennsylvania’s “65 years and older” population is the highest among comparison states while Georgia’s is the lowest.
8 Walden, Michael L. North Carolina in the Connected Age: Challenges and Opportunities in a Globalizing Economy. Chapel Hill, NC: University of North Carolina Press,
2008.
9 The domestic migration measured at the county level includes movement from any U.S. County to another. Therefore, migration between counties in the same economic
development region will be counted as domestic migration.
10 Passel, Jeffrey and D’Vera Cohn. (2008). Baby Boomers Approach Age 65 – Glumly: Survey Findings About America’s Largest Generation [Executive Summary].
Pew Research Institute. http://pewresearch.org/pubs/1834/baby-boomers-old-age-downbeat-pessimism.
U.S Census Bureau
13
INDICATOR 1: POPULATION
1-3 Percent of Population by Age Group, 2009
Under 24 years 25 to 44 years 45 to 64 years 65 years and over
United States 34% 27% 26% 13%
North Carolina 34% 27% 26% 13%
Georgia 33% 26% 22% 9%
Massachusetts 28% 24% 24% 12%
Michigan 30% 22% 24% 12%
Pennsylvania 27% 22% 24% 13%
South Carolina 30% 23% 23% 12%
Virginia 30% 25% 23% 11%
What Does this Mean for North Carolina Economic Development?
The relationship between economic development and population growth is strong. North Carolina will experience
population growth from individuals moving from other states or countries if employment opportunities continue and
the State maintains a high quality of living. To meet the needs of an expanding economy, economic development
professionals will need to continue to focus on strategic workforce planning to ensure the State has an appropriately
sized workforce with necessary skill sets. In addition, as North Carolina’s population increases, policymakers will need to
continue to look for innovative ways to fund infrastructure (schools, utilities, roads/transit, broadband, water/sewer, etc.)
improvements.
U.S Census Bureau
14
INDICATOR 2: LABOR FORCE
Key Findings
• Between 2005 and 2010, North Carolina’s labor force grew 3.7 percent, greater than the United States rate of 3.1
percent. Employment fell by 2.1 percent, greater than the national average of 1.9 percent.
• North Carolina’s labor force participation rate of 63 percent in 2010 is lower than the state’s rate of 66 percent
in 2005.
• Women make up 2.2 percentage points more of the employed population in 2009 than they did in 2005.
• Labor force participation rates among older workers (55+ years old) are increasing, but this increased participation is
being offset by declining participation among younger workers (between 24 and 54 years old).
Indicator Overview
A state’s labor force is defi ned as the number of people employed plus those seeking employment. Labor force growth
can signify a positive economic outlook. The labor force participation rate is the ratio between a state’s labor force and its
total population. Historically, increases in labor force participation were the result of population increases associated with
the “Baby Boomer” generation and women entering the workforce. Future labor force participation rates should increase
as the State recovers from the recession and older workers increasingly have the ability and need to work longer in life.11
How Does North Carolina Perform?
While the State’s labor force grew larger, the State’s employment level dropped, decreasing 2.1 percent in the last fi ve
years. This trend was not unique to North Carolina as all comparison states except Virginia and South Carolina saw
a decrease in employment levels. Of the comparison states, North Carolina had the fourth lowest percent decline of
employment. All comparison states had an increase in labor force except Michigan which registered a 5.4 percent
decrease from 2005 to 2010. The percent increase in labor force participation in North Carolina, South Carolina,
and Virginia were all above the national average. This may indicate increased desire by the labor force to work in the
Southeastern United States and companies to locate in the State.
11 Mary Daly and Tali Regev, “Labor Force Participation and the Prospects for U.S. Growth”, http://www.frbsf.org/publications/economics/letter/2007/el2007-33.
html#subhead2
VA
SC
PA
MI
MA
GA
NC
US
3.1%
3.7%
1.7%
3.3%
1.1%
5.0%
0.0%
6.7%
3.0%
-2.8%
-11.1%
-5.4%
-0.7%
-3.7%
-2.1%
1.9%
Labor Force Employment
U.S. Bureau of Labor Statistics
2-1 Growth in Labor Force and Employment, 2005 - 2010
15
INDICATOR 2: LABOR FORCE
For much of the past four decades, labor force participation rates in the United States trended up, rising from less than
60 percent in the early 1960s to more than 67 percent by the late 1990s. However, after peaking in 2000, the labor force
participation rate has declined steadily. The aging of the baby boom cohort is increasing the size of older age groups,
which historically have lower labor force participation rates, and teenagers and young adults are remaining in school
longer.12 Both of these were exacerbated by the recession. The widespread loss of jobs and wealth forced more members
of the baby boom cohort to delay retirement. The loss of jobs pushed more students to remain in school in the hopes of
increasing their marketability and delaying entry into the job market until more positions were available.
Although the overall labor force has grown, labor force participation rates have declined in the United States since 2005
[2-2]. This is because the U.S. population has been growing faster than the labor force. In 2005, North Carolina’s labor
force participation rate was 66.2 percent; in 2010 it dropped to 62.7 percent, below the national average of 64.7 percent.
Among comparison states, only Georgia and Michigan had larger percentage point drops in participation rates. Virginia
was the only state to experience an increase in labor force participation between 2005 and 2010, likely due to the
presence of Federal employees and contractors. The labor force participation rates for 2005 and 2010 are shown below.
12 Aaronson, Stephanie et al. “The Recent Decline in Labor Force Participation and its Implications for Potential Labor Supply.” Division of Research and Statistics,
Board of Governors of the Federal Reserve System. March 2006. http://bigpicture.typepad.com/comments/fi les/200603bpea_aaronson.pdf
56.0%
58.0%
60.0%
62.0%
64.0%
66.0%
68.0%
70.0%
US NC GA MA MI PA SC VA
66.0%
64.7%
66.2%
62.7%
68.4%
63.5%
66.8%
66.2%
2-2 Labor Force Participation Rates, 2005 & 2010
65.4%
61.6%
64.6%
63.5%
63.8%
61.3%
68.7%
68.9%
2005 2010
Source: U.S. Bureau of Labor Statistics
Note: The chart starts at 56 percent to better show the difference between years.
2-2 Labor Force Participation Rates, 2005 & 2010
16
In addition to the decline in labor force participation, the recent recession has changed the male-female composition
of the workforce. The loss of many male dominated jobs has led many people to term the last recession as a
“mancession.”13 This male job loss has caused women’s share of employed workers to increase, especially in North
Carolina. From 2005 to 2009 the women’s share of employed workers in North Carolina has increased 2.2 percentage
points, from 46.1 percent to 48.3 percent. This was the largest increase among competitor states and more than twice
the percentage point increase nationally. Nationally, women’s share of employment is lower than North Carolina’s, 47.3
percent and 48.3 percent respectively. South Carolina had the next highest jump from 2005 to 2009, going from 47.9
percent to 49.8 percent. This employment shift towards women refl ects the jobs the recession left behind. The economy
mainly lost jobs in the construction and manufacturing fi elds, which tend to employ more men than women. Meanwhile,
women tend to work in more “white collar” positions such has health care and education. Women have also seen higher
college graduation rates in the last 10 years, another buffer against unemployment.
Older adults (55 years and older) usually choose to exit the workforce, but market forces and increased access to medical
care have extended the working lives of many cohorts, including the Baby Boomers. This historical trend reversal for the
Baby Boomer generation means they have increased their labor force participation rate. They still fall behind the rates
of workers in the lower age groups, but in a slow economy those are positions that would have been fi lled by younger
workers .14 As the population of North Carolina continues to age, the increased participation rate of older workers will
cause the older labor force cohort to grow at a faster rate than before. In 2010, the percentage of workers aged 55 and
above participating in the labor force was 38.2 percent, up from 35.2 percent in 2005 and 33.6 percent in 2000.
13 Sarah Baxter, “Women are victor in ‘Mancession’”, The Times, http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6445913.ece
14 Catherine Rampell, NY Times 7/15/2010, “Seniors Outnumber Teenagers in Job Force”, http://economix.blogs.nytimes.com/2010/07/15/seniors-outnumber-teenagers-
in-job-force/
40%
42%
44%
46%
48%
50%
46.4%
2005 2009
47.3%
46.1%
48.3%
46.5%
46.6%
48.4%
49.2%
46.8%
48.5%
47.2%
48.0%
47.9%
49.8%
47.4%
48.5%
US NC GA MA MI PA SC VA
INDICATOR 2: LABOR FORCE
Source: U.S. Bureau of Labor Statistics
Note: The chart starts at 56 percent to better show the difference between years.
2-3 Female Share of Employment, 2005 & 2009
17
This shift is made more important since the share of workers between ages 25 and 54 participating in the labor force has
decreased from 85.2 percent in 2000 to 82.2 percent in 2010. The three percentage point decline in the “prime” age
group, 25 to 54 years old, is smaller than the increased participation rate among those over 54 years of age. However,
the “prime” group makes up the largest portion of the work force; there are 107,000 more people in the labor force
over 54 years of age than there would be had the participation rate remained the same as it was in 2000. Meanwhile,
the decreased participation rate by workers in the “prime” group (25 to 54) decreased their labor force participation
by 111,000 people. Thus, shifting participation rates by North Carolinians 25 and older has lead to a decrease of
approximately 7,000 people had the participation rates remained at 2000 levels.15
What Does this Mean for North Carolina Economic Development?
The majority of North Carolina’s labor force is currently between the ages of 25 and 54. As this population segment
ages, it is predicted many of these workers will stay in the labor force longer due to economic reasons. Given the recent
decline in job opportunities for workers in labor-intensive industries and the aging workforce, programs like occupational
extension and workforce development will continue to increase in value, particularly for older workers. The recent loss of
male dominated fi elds will also increase the need for training and educational programs to provide skills needed to fi ll jobs
around the State and relieve the pressure from high unemployment on the economy.
15 This assumes all other demographic trends since 2000, such as population increases, would have occurred.
2000 2005 2010
0
10
20
30
40
50
60
70
80
90
16 to 24 years 25 to 54 years 55 years and over
67.2%
61.4%
53.4%
85.2%
82.5%
82.2%
33.6%
35.2%
38.2%
INDICATOR 2: LABOR FORCE
Source: U.S. Bureau of Labor Statistics
2-4 Labor Force Participation Rate in North Carolina by Age Group,
2000, 2005 & 2010
18
Key Findings
• From 2005 to 2010 the State has a net job loss of approximately 23,700 across all industries. Manufacturing
sector losses are 137,100, meaning all other sectors have had a net gain of 113,400 jobs over this time.
• Five years ago the manufacturing industry in North Carolina only trailed the public sector in employment, now it has
fallen to fourth behind both Health Care and Retail Trade.
• The public sector is the largest employment sector, employing one in fi ve working North Carolinians; 18 percent of
public sector employment is military, 24 percent is state government, and 52 percent is local government (including
teachers).
• The percent of total employment coming from traditional or labor intensive industries has decreased from 29 percent
of North Carolina’s total industry employment to 24 percent.
Indicator Overview
Industry concentration and employment trends help to determine an economy’s overall health. Analyzing industry trends
can highlight existing competitive advantages, provide insight into the existing workforce skills, and divulge whether a
region’s economic base is susceptible to economic downturns. More specifi cally, understanding how a region’s industry
mix compares to others and how it has changed allows economic development professionals to target scarce resources for
industrial recruitment and expansion, workforce development, and international trade.
How Does North Carolina Perform?
Over the past fi ve years, ten of the twenty super-sectors measured have gained industry employment and ten have
lost employment.16 In general, the changes have lead to a transition away from the State’s traditional, labor intensive,
production-oriented, “blue collar” industries to more of a service and knowledge-based “white collar” economy. Between
2005 and 2010, 91 percent of job growth has been in the service sector industries. Meanwhile, manufacturing industries
have accounted for 56 percent of job losses.
The recession has served to accelerate the State’s economic
transformation. Since 2007 over 100,000 jobs have been
lost in the manufacturing sector. In contrast, only fi ve
sectors have experienced job growth during this time. This
accounts for 90,000 additional jobs, with 97 percent of the
growth concentrated to service sector industries. The public
sector accounts for over 50 percent of the job growth over
this time. Currently, the public sector employs 22 percent
of all employed people in North Carolina, which exceeds
the national average of public sector employment (18
percent). However, the largest source of North Carolina’s
over-concentration in government employment is military
sector employment, which is more than double the national
average. When removed, civilian government workers only
account for 18 percent of the total civilian workforce in North
Carolina compared to 17 percent nationwide.
16 Data used in this section includes all employees covered by unemployment insurance. Covered employment is subject to the Employment Security Law on which
Unemployment Insurance taxes must be paid.
INDICATOR 3: INDUSTRY MIX
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
White Collar Blue Collar
3-1 Industry Type
2005 2010 2015
Economic Modeling Specialists, Inc.
19
3-2 North Carolina Employment by Industry Sector, 2005 & 2010
Industry Sector
2005 2005 - 2010
% of Total Employment % of Total
Total
Change
%
Agriculture, forestry, fi shing and hunting 29,289 0.73% 27,570 0.69% -1,719 -6%
Mining 3,522 0.09% 3,577 0.09% 55 2%
Utilities 13,277 0.33% 12,379 0.31% -898 -7%
Construction 233,351 5.82% 174,742 4.38% -58,609 -25%
Manufacturing 570,876 14.23% 433,722 10.88% -137,154 -24%
Wholesale trade 171,666 4.28% 166,656 4.18% -5,010 -3%
Retail trade 447,271 11.15% 436,525 10.95% -10,746 -2%
Transportation and warehousing 136,529 3.40% 121,453 3.05% -15,076 -11%
Information 77,049 1.92% 69,736 1.75% -7,313 -9%
Finance and insurance 143,012 3.57% 144,920 3.63% 1,908 1%
Real estate and rental and leasing 50,329 1.25% 49,895 1.25% -434 -1%
Professional and technical services 160,809 4.01% 174,473 4.38% 13,664 8%
Management of companies and enterprises 63,594 1.59% 72,186 1.81% 8,592 14%
Administrative and waste services 225,571 5.62% 229,959 5.77% 4,388 2%
Educational services 51,235 1.28% 63,218 1.59% 11,983 23%
Health care and social assistance 397,468 9.91% 463,642 11.63% 66,174 17%
Arts, entertainment, and recreation 45,821 1.14% 54,124 1.36% 8,303 18%
Accommodation and food services 313,783 7.82% 338,232 8.48% 24,449 8%
Other services (except public administration) 97,609 2.43% 90,713 2.27% -6,896 -7%
Government 779,128 19.42% 859,732 21.56% 80,604 10%
Totals 4,011,189 100% 3,987,454 100% -23,735 -1%
Economic Modeling Specialists, Inc.
Job loss in the manufacturing sector garnered signifi cant attention in recent years. As mentioned previously, ten of the
twenty industry sectors in the chart above have lost employment since 2005. However, only three lost employment
between 2005 and 2007, and the manufacturing sector accounted for 87 percent of the State’s gross employment loss
during that time. Although the losses experienced in the manufacturing sector have accelerated, the decline of the sector
was occurring prior to the recession. Even though North Carolina’s largest traditional industry sector is in severe decline,
successful signs exist especially when taken in the context of six of the State’s competitors and the U.S. as a whole.
Between 2005 and 2010, North Carolina experienced losses in other sectors as well. Construction, Transportation &
Warehousing, Information, and Retail Trade lost a combined 91,744 jobs during this period. However, the State also
experienced signifi cant employment increases in other sectors to partially offset these losses. Employment in Health
Care & Social Assistance, Accommodations & Food Services, Educational Services, Professional & Technical Services,
Management of Companies & Enterprises, and Arts, Entertainment & Recreation increased by 133,165.
Only two competitor states, Georgia and Michigan, have lost larger portions of their manufacturing industry. From 2005
to 2010, these states have experienced overall employment losses across all industry sectors of 5 percent and 13
percent, respectively, while North Carolina has lost less than 1 percent of its overall employment over the same period.
For comparison, the Nation as a whole has lost 19 percent of its manufacturing sector and 3 percent across all industry
sectors. North Carolina’s large manufacturing losses amounting to one quarter of the 2005 sector level employment has
signifi cantly impacted the State’s economy. The State’s overall employment loss of 1 percent between 2005 and 2010
appears to indicate North Carolina’s economy is transitioning away from manufacturing to other sectors.
INDICATOR 3: INDUSTRY MIX
Employment
2010
20
2005
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
NC US GA MA MI PA SC VA
2010
INDICATOR 3: INDUSTRY MIX
What Does this Mean for North Carolina Economic Development?
Recent industry employment trends can be used to gauge which industries are growing or contracting as well as to
determine resource allocation for infrastructure improvements, incentives, and workforce development. The transition of
North Carolina’s economy from labor-intensive traditional industries to knowledge-based or service-related industries such
as health care and technical services suggests the need to continue workforce training and redevelopment opportunities
for displaced workers. This trend has persisted for every year since at least 1990 with service and knowledge-based
industries growing at a faster rate (or shrinking at a slower rate) than traditional labor intensive industry sectors. Still,
the State’s traditional labor-intensive industries will have a place in the State’s economy for years to come. Rather than
disappearing, North Carolina’s traditional manufacturing industries are likely to take on higher value-added or more
technologically advanced activities to ensure competitiveness in the global economy.
3-3 Change in the Manufacturing Industry 2005 - 2010
Percent of Total Employment in Manufacturing Manufacturing
Employment Change
Total Change
%
Change
NC -137,154 -24%
US -2,631,352 -19%
GA -58,857 -28%
MA -51,616 -17%
MI -211,188 -31%
PA -121,350 -18%
SC -53,696 -20%
VA -64,716 -22%
Economic Modeling Specialists, Inc.
21
INDICATOR 4: OCCUPATIONAL MIX
Key Findings
• When ranked by employment, the top fi ve occupations in North Carolina all earn less than $30,500 annually.
• All fi ve of the top earning occupations in North Carolina have median annual earnings of $60,000 or more.
• Between 2005 and 2010, jobs in managerial, professional and technical occupations, generally considered desirable
occupations, grew 7 percent in North Carolina despite the recession.
• All seven of the State’s economic development regions experienced signifi cant growth in community and social services
occupations.
Indicator Overview
Knowledge-based jobs sustain an economy by increasing labor productivity and wealth. These jobs help insulate a
region from adverse business events that typically cause economic downturns. A region’s occupation mix can range from
occupations that are knowledge-intensive and associated with higher levels of educational attainment to those historically
requiring less education. Occupational composition can also help explain differences in wages among regions.
How Does North Carolina Perform?
When ranked by employment, the top fi ve occupations in North Carolina all earn less than $30,500 annually [4-1].17 Each
of these, excluding food preparation and serving, experienced employment declines between 2005 and 2010. However,
prior to the Great Recession18 only production jobs were in decline. Over the 2005 to 2010 timeframe, production
employment declined in every region of the State, resulting in a loss of 92,950 jobs (-22.2 percent).
17 Top fi ve North Carolina Occupations [2010 employment]: 1) Offi ce and administrative support [592,467]; 2) Sales [403,920]; 3) Food preparation [340,739];
4) Production [325,484]; and 5) Transportation and Material Moving [276,046].
18 The Great Recession began in December, 2007.
0
100,000
200,000
300,000
400,000
500,000
600,000
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌁
􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀􀁄􄐁􀄂􀈁􀆚􉨁􀄞􁸁􀆌􈰁􀅝􅴁􀄂􀈁􀅯􆼀􀀃􀌀
􀁄􄐁􀅽􇴁􀇀􌀁􀅝􅴁􀅶􇘁􀅐􅀀􀀃􀌀
􀀦􂘁􀅽􇴁􀅽􇴁􀄚􁨀􀀃􀌀 􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌀
􀁗􅜁􀆌􈰁􀄞􁸁􀆉􈤁􀄂􀈁􀆌􈰁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘀􀀃􀌁
􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀􀁞􅸁􀄞􁸁􀆌􈰁􀇀􌀁􀅝􅴁􀅶􇘁􀅐􅀀
􀁞􅸁􀄂􀈁􀅯􆼁􀄞􁸁􀆐􉀀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌁
􀆌􈰁􀄞􁸁􀅯􆼁􀄂􀈁􀆚􉨁􀄞􁸁􀄚􁨀􀀃􀌀
􀁋􄬁􀄸􃠁􀄐􁀁􀄞􁸀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌀
􀀄􀐁􀄚􁨁􀅵􇔁􀅝􅴁􀅶􇘁􀅝􅴁􀆐􉀁􀆚􉨁􀆌􈰁􀄂􀈁􀆟􉼁􀇀􌀁􀄞􁸀􀀃􀌀
􀁞􅸁􀆵􋔁􀆉􈤁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨀􀀃􀌤
$30,430
$28,205
$18,408 $29,286
$28,475
Economic Modeling Specialists, Inc.
4-1 Top Employment Occupations in North Carolina
Annual Median Wages and Unemployment, 2010
22
INDICATOR 4: OCCUPATIONAL MIX
On average, management occupations pay the highest wages in the North Carolina, followed by computer and
mathematical science occupations and health care practitioners [4-2]. All fi ve of the top earning occupations in the State
have median annual earnings of approximately $64,000 or more. However, there are far less North Carolinians working in
the top fi ve earning occupations (14 percent) than those working in the top employing occupations (49 percent) discussed
in chart 4-1.
Growth in management, professional and technical occupations19 often indicates a state’s transition into a knowledge-based
economy.20 These occupations are generally associated with higher educational attainment levels (bachelor’s
degree or higher) and corresponding higher wages. Despite the Great Recession, jobs in managerial, professional and
technical occupations grew by 7 percent in North Carolina. All seven economic development regions in the State added
knowledge-based jobs between 2005 and 2010. However, most were concentrated in the State’s more urban regions
[4-3]. While the Research Triangle (10 percent), Charlotte (8 percent), and Eastern (7 percent) regions all experienced
growth from 2005 to 2010, the rates were signifi cantly slower than the growth from years prior at 18 percent, 16 percent,
and 11 percent, respectively (2003-2008).
19 Occupations categories include: management; business and fi nancial operations; computer and mathematical science; architecture and engineering; life, physical and
social science; community and social service; legal; education, training and library; and arts, design, entertainment, sports, and media.
20 Atkinson, R.D., and R.H. Court. 1998. The New Economy Index: Understanding America’s Economic Transformation. Washington, DC: Progressive Policy Institute.
0
50,000
100,000
150,000
200,000
250,000
Architecture
and engineering
Healthcare Legal
􀆉􈤁􀆌􈰁􀄂􀈁􀄐􁀁􀆟􉼁􀆟􉼁􀅽􇴁􀅶􇘁􀄞􁸁􀆌􈰁􀆐􉀀􀀃􀍡
and technical
􀀒􁈁􀅽􇴁􀅵􇔁􀆉􈤁􀆵􋔁􀆚􉨁􀄞􁸁􀆌􈰀􀀃􀌁􀄂􀈁􀅶􇘁􀄚􁨀􀀃􀌁
􀅵􇔁􀄂􀈁􀆚􉨁􀅚􅨁􀄞􁸁􀅵􇔁􀄂􀈁􀆟􉼁􀄐􁀁􀄂􀈁􀅯􆼀􀀃􀌁
􀆐􉀁􀄐􁀁􀅝􅴁􀄞􁸁􀅶􇘁􀄐􁀁􀄞􁸀􀀃􀌀
􀁄􄐁􀄂􀈁􀅶􇘁􀄂􀈁􀅐􅀁􀄞􁸁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌤
$91,603
$72,238
$68,848
$67,288
$63,898
Economic Modeling Specialists, Inc.
4-2 Top Earning Occupations in North Carolina
Annual Median Wages and Employment, 2010
23
INDICATOR 4: OCCUPATIONAL MIX
From 2005 to 2010, all seven of the State’s economic development regions experienced signifi cant growth in community
and social services occupations. Six of the seven regions added jobs in health care practitioners, technical, and support
groups [4-4]. Healthcare occupations should continue to grow in the region as North Carolina’s population both ages and
grows. In health care occupations, home health aides have the largest worker growth from 2005 to 2010, adding over
12,000 positions, but have a median annual wage of around $19,000 or $9.53 an hour.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Southeast
Region
Research
Triangle
Region
Piedmont
Triad
Region
Northeast
Region
Eastern
Region
􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹒
Region
Advantage
West
2005 jobs 2010 jobs
Economic Modeling Specialists, Inc.
4-3 Management, Professional and Technical Occupations by
North Carolina Economic Development Region
24
INDICATOR 4: OCCUPATIONAL MIX
4-4 Top 5 Growing Occupations by Economic Development Region, 2005-2010
Advantage
West
Charlotte Eastern Piedmont
Triad
North
East
Research
Triangle
South
East
Community and social services 7% 18% 23% 16% 22% 14% 19%
Computer and mathematical science 14% 11%
Food preparation and serving related 12%
Health care practitioners and technical 8% 15% 10% 11% 7% 24%
Health care support 12% 20% 10% 16% 21% 17%
Life, physical, and social science 16% 11% 13%
Personal care and service 15%
Business and fi nancial operations occupations 5% 10%
Education, training, and library occupations 7% 16% 9% 10% 8%
Protective service occupations 8% 9%
What Does this Mean for North Carolina Economic Development?
As North Carolina transforms into a knowledge-based economy, the State will need to continue to create opportunities
for citizens to move into knowledge-intensive occupations. Strategies to accomplish this may include increased science,
math and technology curriculum offerings, and continued investment in targeted workforce development programs to
retrain displaced workers. In addition, community development efforts and improved access to basic services, such as
health care, are increasingly important as North Carolina transitions to a knowledge-based economy. Individuals who seek
managerial, professional, and technical jobs tend to be highly mobile and willing to move, resulting in quality of life playing
an important role in recruiting and retaining talent.
Economic Modeling Specialists, Inc.
25
INDICATOR 5: EXPORTS
Key Findings
• In 2010, North Carolina’s exports of goods21 totaled $24.8 billion, a 13.9 percent increase from 2009.
• Canada remained the State’s top export market; however, exports to Canada fell 4.5 percent while exports to China
grew 157.2 percent between 2005 and 2010.
• Chemicals were North Carolina’s leading exports, accounting for nearly one fi fth of the State’s total export value.
Indicator Overview
A state’s growth and prosperity depend on its ability to export goods and services to foreign markets as 80 percent of
the global economy lies outside the United States.22 Despite the impact of the global recession on a state’s economy,
the value of a state’s exports continue to be a key driver of its gross domestic product (GDP). Diversifi cation of export
portfolios in industry sector and markets destination is the vital engine of the long-term economic growth in North Carolina.
How Does North Carolina Perform?
In 2010, North Carolina’s exports totaled $24.8 billion representing an increase of 13.9 percent over the previous year
while the U.S. exports rose 21 percent to $1.3 trillion. Among its southern comparison states, North Carolina ranked
higher than South Carolina and Virginia but behind Georgia in the value of exports. Michigan outperformed all benchmark
states due largely to its high volume exports in transportation equipment, such as motor vehicles and parts as well as
aerospace products and parts. In 2010, growth prevailed in nearly every export sector in North Carolina. Companies in
the Machinery, Electrical, & Transportation Equipment and Paper industries saw signifi cant growth. Growth in exports was
less for Computer & Electronic Products as well as Textiles and Fabrics. Though the Chemical sector was one of the few
industries that experienced decline in exports in 2010, it still accounted for one-fi fth of the North Carolina’s total exports.
Measured by percentage growth in exports between 2005 and 2010, North Carolina gained 13.6 percent. Pennsylvania
experienced the largest increase at 39.2 percent, whereas Michigan grew merely 5 percent, the lowest one among the
benchmark states.
21 The export indicator provides statistics on exports of goods only. All fi gures are for total exports (domestic exports plus re-exports) and are drawn from the Origin of
Movement (OM) series compiled by the Foreign Trade Division of the U.S. Census Bureau. OM data cover exports of goods only. There are no comparable statistics for
exports of services at the state level.
22 Business Roundtable’s Trade Resource Center http://trade.businessroundtable.org/trade_2006/wto/us_economy.html
0
$10
$20
$30
$40
$50
NC GA MA MI PA SC VA
(in Billions)
2005
2010
$21.8
$24.8
$23.1
$28.7
$24.7
$26.3
$42.4
$44.5
$25.0
$34.8
$15.6
$20.3
$13.7
$17.1
Source: Wisertrade 2011
5-1 Export Dollar Value, 2005 & 2010
(in 2010 dollars)
26
INDICATOR 5: EXPORTS
Canada has long been North Carolina’s leading export market in terms of dollar value. In 2010, companies in North
Carolina exported $5.4 billion worth of goods to Canada, up 19.9 percent from the previous year. China and Mexico
ranked second and third for North Carolina export markets, totaling $2.2 billion and $1.8 billion, respectively. Among
its top ten export markets, North Carolina’s exports to China represented the largest destination country increase
(157.2 percent) during the 2005 – 2010 period; followed by Brazil (93 percent) and France (60.3 percent).
Between 2005 and 2010 Computers & Electronics, Textiles & Fabrics, and Plastics & Rubbers experienced declines in
exports, but still remain among the State’s top ten export sectors in 2010. Chemical sector gained slightly over $1 billion
in export sales; however, measured by percentage growth, Food & Kindred Products (meats, grains and dairy) saw the
largest increase at 105.2 percent. The increase was due in large part to the rising demand of the State’s food products
in Japan.
$0 $2 $4 $6
Canada
China
Mexico
Japan
France
United Kingdom
Germany
Honduras
Brazil
Korea, Republic
Netherlands
(in Billions)
5-2 NC Top Export Destinations
2005 2010
24.1%
22.3%
93%
3.2%
15.9%
-10.9%
60.3%
-1.7%
8.7%
157.2%
-4.5%
Source: Wisertrade 2011
27
5-3 North Carolina Top Exports, 2005 & 2010
(in 2010 dollars)
INDICATOR 5: EXPORTS
What Does this Mean for North Carolina Economic Development?
Despite the global recession and its impact on North Carolina’s economy, exports continued to be one of the key drivers
for the State’s economic development. Exporting helps companies in North Carolina diversify their business portfolios
and become more profi table and resilient in the global market. Exports are also critical in employment growth - nearly one
out of every ten jobs in the State is supported by exports.23 In addition to the United States Department of Commerce’s
presence across the globe, the International Trade Division of North Carolina’s Department of Commerce has staff
in North Carolina and in seven locations around the globe to facilitate export growth. For North Carolina to remain
competitive in the global economy, it must continue to explore new markets for the goods and services it produces. Such
efforts require focus in strengthening and expanding relationships with overseas trading partners and understanding how
North Carolina industries fi t within global commodity value chains. Infrastructure investment in highways, inland terminals
and port facilities is needed to improve the ability to effi ciently move goods. Enhanced export assistance and increased
availability of credits to small and medium-sized companies seeking to export are crucial in connecting businesses to the
global market place.
23 The statement is based on the 2010 IMPLAN analysis performed by the NC Department of Commerce to estimate export contribution to the state’s economy.
Food & Kindred
Products
Agricultural Products
􀁗􅜁􀅯􆼁􀄂􀈁􀆐􉀁􀆟􉼁􀄐􁀁􀆐􉀀􀀃􀌃􀎘􉠀􀀃􀌀􀁚􅨁􀆵􋔁􀄏􀼁􀄏􀼁􀄞􁸁􀆌􈱐
Products
Paper Products
Electrical Equipment,
Appliances, & Component
􀁤􆐁􀄞􁸁􀇆􌘁􀆟􉼁􀅯􆼁􀄞􁸁􀆐􉀀􀀃􀌃􀎘􉠀􀀃􀌀􀀦􂘁􀄂􀈁􀄏􀼁􀆌􈰁􀅝􅴁􀄐􁀁􀆐􉁃
Computer & Electronic
Products
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇙅
Equipment
Machinery,
Except Electrical
Chemicals
(in Billions)
$3.8
$4.8
$2.5
$3.1
$1.8
$2.6
$1.9
$1.5
$0.8
$1.1
$0.7
$1.1
$1.0
$1.0
$0.6
$0.9
$0.4
$0.8
$3.5
$2.6
2005 2010
Source: Wisertrade 2011
28
INDICATOR 6: ENERGY
Key Findings
• In 2009, the average industrial price of electricity in North Carolina was lower than the national average.
• Industrial electricity price increases from 2004 to 2009 were over 20 percent higher than from 2002 to 2007.
• For the period 2004-2009, North Carolina’s increase in average industrial electricity prices (23 percent) was less than
the United States average (28 percent). South Carolina and Virginia’s average increases over the period were 40
percent and 61 percent, respectively.
• North Carolina continues to add megawatts of renewable-generated electricity, due to a mandate adopted in 2007,
including over 4,500 megawatts of solar power.
Indicator Overview
Energy is critical to economic development. In particular, low cost power is important to the manufacturing sector in North
Carolina, despite the State’s ongoing transition towards service industries. In addition, the State has seen growth in a
number of energy intensive industries, such as data centers. The utility industry is regulated in North Carolina and most
customers are served by two investor-owned entities, Duke Energy and Progress Energy. In addition to Duke Energy and
Progress Energy, service is provided by electric membership corporations or municipal power systems. In North Carolina,
the Utilities Commission is responsible to the investor-owned utilities and the public to provide just and reasonable
rates and charges for public utility services and to promote conservation of energy. The cost of providing energy varies
by a state’s natural resources, transportation and electric infrastructure, types of power generation facilities, age of the
facilities, and anticipated future energy needs.
The electrical energy landscape is in a period of rapid change – and those changes could have bearing on North Carolina.
For example, the country’s nuclear plant fl eet is aging, and North Carolina’s Duke Energy has begun the permitting
process to build a new nuclear plant to serve the State’s customers. According to the National Energy Technology
Laboratory, 2010 marked the largest increase in gigawatts of capacity from coal since 1985; one of those new plants
was built at Cliffside in western North Carolina. Meanwhile, states have been more active than ever before in creating
policies to advance renewable energy sources such as wind and solar. The U.S. Energy Information Administration projects
“renewable-generated electricity will account for 17% of total U.S. electricity generation in 2035, up from 9% in 2008.”24
Federal loan guarantees and Recovery Act dollars have contributed to this growth by mitigating some of the risk.
How Does North Carolina Perform?
Electricity Costs
In 2009, the average industrial price of electricity in North Carolina was 5.99 cents per kilowatt hour, lower than the U.S.
average (6.70 cents) and all but one benchmark state (South Carolina). In recent years, North Carolina has competed with
lower prices in neighboring states, South Carolina and Virginia. However, in 2009, Virginia’s prices were nearly two cents
higher than they were in 2007 and nearly one cent higher than North Carolina’s.
Between 2004 and 2009, North Carolina’s average prices rose by a full cent in nominal terms [6-1]. While this is a
substantial increase, all comparative states experienced increases of more than 38 percent, except Pennsylvania. Thus,
North Carolina’s long-enjoyed competitive advantage in lower relative industrial electric prices still largely exists even as
the price increases. However, cost uncertainty exists in the sector due to the changing conditions with the State’s investor
owned utilities.25
24 EIA, “How much of our electricity is generated from renewable sources?”, http://www.eia.doe.gov/energy_in_brief/renewable_energy.cfm
25 North Carolina’s two investor-owned utilities (IOU’s), Duke Energy and Progress Energy, will begin general rate cases in 2011, a regulatory proceeding with the North
Carolina Utilities Commission that will determine how much of utility operations can be justly and fairly recoverable in rates. At the same time, Duke and Progress have
announced plans for a merger and indicated a desire to build new baseload, likely a nuclear plant, within the decade. Dr. Mike Walden, an economist at North Carolina
State notes in a recent news article that a merger could mean cost savings for customers: “if the larger company can better take advantage of economies of scale,
rates may be lower than they would have been with the smaller companies,” he said. On the other hand, rates could rise. A planned Progress nuclear facility in Florida is
expected to add $25 to monthly electric bills there, according to a report in the Charlotte Observer.
29
INDICATOR 6: ENERGY
6-1 Average Industrial Price of Electricity, cents per KWh, 2004-2009
(Prices are not adjusted for infl ation)
US NC GA MA MI PA SC VA
2004 5.25 4.88 4.43 8.48 4.92 5.87 4.13 4.27
2005 5.73 5.04 5.28 9.22 5.32 6.29 4.55 4.46
2006 6.16 5.23 5.38 13.04 6.05 6.63 4.71 4.69
2007 6.39 5.47 5.53 13.03 6.47 6.87 4.83 5.07
2008 6.83 5.54 6.67 14.85 6.74 7.02 5.37 5.82
2009 6.70 5.99 6.12 14.08 6.99 7.21 5.79 6.91
% change
04-09
27.6% 22.7% 38.1% 66.0% 42.1% 22.8% 40.2% 61.8%
Renewable Energy
In 2007, the North Carolina General Assembly enacted a mandatory Renewable and Effi ciency Portfolio Standard 26
(REPS), requiring 12.5 percent of retail energy sales to come from renewable and/or effi ciency sources by 2020. There
are 35 states with a renewable energy mandate, standard or goal, but no other state in the Southeast has a requirement.
This creates a potential competitive advantage for North Carolina over the rest of the Southeastern United States to attract
signifi cant new development of the renewable energy and energy conservation supply chains from energy equipment
to power generation. Between 2007 and 2009, the State added 4,563 MW of solar power and 44,646 MW of biomass
power, which along with other renewable generated energy sources (other than hydroelectric) contributed to an increase of
over 3 percentage points in renewable power generation from 2005 to 2009 [6-2].
26 http://www.ncga.state.nc.us/enactedlegislation/statutes/html/bysection/chapter_62/gs_62-133.8.html
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2009 Total Renewable
􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘲
2009 Renewables
w/o Hydro
2005 Total Renewable
􀁗􅜁􀆌􈰁􀅽􇴁􀄚􁨁􀆵􋔁􀄐􁀁􀆟􉼁􀅽􇴁􀅶􇘲
2005 Renewables
w/o Hydro
US NC GA MA MI PA SC VA
United States Energy Information Association data, 2010
6-2 Percent Generation in MWh Renewable Energy
with Hydroelectric Production, 2005 & 2009
Calculations based on Energy Information Association data, 2010.
30
INDICATOR 6: ENERGY
North Carolina outpaces many competitor states in solar generation as a portion of its total renewable portfolio. Solar
thermal and photovoltaic accounted for 0.2 percent of the State’s renewable portfolio in 2009, but in Georgia, Michigan,
South Carolina and Virginia, solar generation was zero. North Carolina currently does not have any developed wind
generation, but policymakers and economic developers are actively pursuing its potential on land and in the State’s
coastal waters. Wind accounts for over half of the total U.S. renewable portfolio [6-3].
6-3 Percent of State Renewable Portfolio by Energy Type, 2009
Geothermal Other Biomass Solar Thermal & PV Wind Wood Fuels
US 10.4% 12.8% 0.6% 51.4% 24.7%
NC 0.0% 6.9% 0.2% 0.0% 92.8%
GA 0.0% 2.8% 0.0% 0.0% 97.2%
MA 0.0% 90.1% 0.0% 0.5% 9.4%
MI 0.0% 31.8% 0.0% 11.4% 56.8%
PA 0.0% 47.1% 0.1% 32.1% 20.7%
SC 0.0% 7.9% 0.0% 0.0% 92.1%
VA 0.0% 29.3% 0.0% 0.0% 70.7%
Calculations based on Energy Information Association data, 2010
The costs associated with energy production have been a barrier for large-scale renewable production. “Renewable energy
power plants are generally more expensive to build and to operate than coal and natural gas plants. Recently, however,
some wind-generating plants have proven to be economically feasible in areas with good wind resources, compared with
other conventional technologies, when coupled with the [Federal] Renewable Electricity Production Tax Credit.”27 North
Carolina has also been active in studying energy conservation approaches, such as smart grid technology. In 2009 North
Carolina regulators cleared Duke Energy Carolinas to start a pilot program in Charlotte to establish a pilot “smart grid”
project.28
What Does this Mean for North Carolina Economic Development?
New economic development projects and the expansion of existing businesses are impacted by the cost, availability
and reliability of energy. North Carolina’s inexpensive and reliable electricity has historically been a competitive
advantage for economic development prospects. However, the State may be losing ground in this regard as the rising
cost of fuel and the State’s growing population and demand for energy leads to the construction of new generation
plants and potentially higher prices. To remain competitive for industrial projects, North Carolina must not only invest in
new energy infrastructure, but also expand initiatives designed to assist companies with energy effi ciency, such as the
State’s Industrial Extension Service. In addition, North Carolina should strive to increase the effi ciency of current power
generation facilities, implement existing effi ciency standards for state buildings, and encourage increased energy and
power research.
North Carolina’s energy landscape is likely to change in coming years. The potential merger of the State’s two investor
owned utilities, the baseload plants they plan to build, and the maturity of the State’s RPS will all be important factors
impacting power costs. Some potential impacts are likely to result in cost savings, while others are likely to increase costs.
The degree of these impacts and their cumulative effect on energy rates for customers remains largely unknown.
27 EIA, “How much of our electricity is generated from renewable sources?”, http://www.eia.doe.gov/energy_in_brief/renewable_energy.cfm
28 Triangle Business Journal, “North Carolina approves Duke Energy’s ‘smart grid’ initiative”, http://www.bizjournals.com/triangle/stories/2009/03/09/daily37.html
31
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
Key Findings
• In 2007, FDI infl ows to North Carolina grew 5.9 percent over 2006 while the United States saw an increase of
6.3 percent.
• Germany was North Carolina’s largest foreign investor in 2007, followed by the United Kingdom and Japan.
• In 2007, approximately 206,700 workers in North Carolina were employed by foreign owned companies.
Indicator Overview
Foreign direct investment (FDI) is a benchmark for measuring the presence of foreign-owned businesses in a state. FDI is
an important indicator of a state’s ability to attract foreign companies and a key determinate of a region’s ability to attract
new technologies, capital, workforce skills, global connections, and job opportunities.
How Does North Carolina Perform?
In 2007, North Carolina’s value of foreign direct investment grew 5.9 percent from the previous year to $30.7 billion
(in 2011 dollars29), representing 2.2 percent of the U.S. total. Between 2002 and 2007, FDI infl ows to North Carolina
experienced an increase of 4.5 percent while Pennsylvania grew 18.8 percent30 . During the same period Michigan
suffered a decline of 45 percent of its 2002 total, due in part to its sharp drop (61 percent) in foreign investment in the
manufacturing sector.
29 All FDI value is in 2011 dollars. The latest data available for FDI value is from 2007
30 FDI dollar value comparison with other benchmark states (Georgia, South Carolina and Virginia) are not available as the 2007 data on FDI value for these states are
suppressed by the U.S. Bureau of Economic Analysis to avoid disclosure of individual companies.
10
20
30
40
50
NC GA* MA MI PA SC* VA*
(in Billions)
2002 2007
$29
$31
$30
N/A
$29
$28
$46
$25
$36
$42
$26
N/A
$21
N/A
Source: U.S. Bureau of Economic Analysis
* Data for GA, SC and VA is suppressed.
7-1 Dollar Value of FDI, 2002 & 2007
(in 2011 dollars)
32
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
North Carolina has traditionally attracted signifi cant foreign direct investments from Europe. In 2007, nearly half of the
State’s FDI came from the member states in the European Union. In terms of dollar value, Germany provided the largest
amount of direct investment in North Carolina representing 18 percent of the state’s total FDI in 2007; followed by the
United Kingdom (15 percent). Measured by percentage growth over the 2002 – 2007 period, German investment in
North Carolina grew merely 7 percent while Switzerland has increased its investment in the state by 81 percent. During
the same period, North Carolina saw declined FDI infl ows from the Netherlands (65 percent), France (34 percent) and
United Kingdom (30 percent). North Carolina continues to attract foreign investment from regions all across the world.
During the 2002-2007 period, inbound FDI from Canada to the state rose 62.5 percent. Companies in Asia also increased
their investment in North Carolina with Japan topping the list. Investment received by the state from countries other than
Canada, Japan and EU members grew 44.5 percent.
In 2008, North Carolina ranked ninth nationally and second among benchmark states in the number of workers hired
by majority-owned U.S. affi liates (“foreign owned companies”). Approximately 206,700 workers in North Carolina were
employed by these foreign owned businesses in which a foreign investor or company held at least a 50 percent stake.
These businesses represented 4.8 percent of total employment in the state, third highest among comparison states,
behind Massachusetts (5.8 percent) and South Carolina (5.4 percent).
Between 2003 and 2008, employment by foreign owned companies in North Carolina grew 1.4 percent while Michigan
and South Carolina saw the greatest declines at -26.4 percent and -15.5 percent, respectively. Virginia had the highest
employment growth of 15 percent, followed by Pennsylvania (13 percent).
Others, 30%
Japan, 12%
United Kingdom, 15%
Switzerland, 4%
Netherlands, 4%
Germany, 18%
France, 4%
Canada, 13%
Source: U.S. Bureau of Economic Analysis
7-2 FDI in NC by Country, 2007
33
INDICATOR 7: FOREIGN DIRECT INVESTMENT (FDI)
What Does this Mean for North Carolina Economic Development?
Foreign direct investment increases integration into the global economy. It encourages adoption of new technologies,
improves labor quality, expands international trade volume, and contributes to economic growth and job creation. The
U.S. continues to be the leading destination for foreign direct investment as it offers a stable and low cost business
environment to serve the world’s largest consumer market. North Carolina’s strategic geographic location provides foreign
companies easy access to customers and suppliers as well as opportunities to tap into the major U.S. markets. As the
global economy begins to recover and businesses start to invest again, North Carolina will face competition for foreign
investment from other states and countries. To retain and attract more foreign investors, North Carolina must continue to
enhance its competitive investment climate including tax structure, legal system, business regulations and fi nancing. In
addition, the State must devote resources to improve physical infrastructure to move people and goods. Improving human
capital through skill development in technical training, foreign language ability, and cultural understanding is essential for
North Carolina to thrive in the global economy. These combined efforts will further maximize the return on investment of
foreign fi rms in the State.
2003 2008
0%
2%
4%
6%
8%
US NC GA MA MI PA SC VA
3.8%
3.9%
5.1%
4.8%
4.4%
4.0%
5.9%
5.8%
4.4%
3.3%
4.0%
4.3%
6.8%
5.4%
3.8%
4.0%
Sources: U.S. Bureau of Economic Analysis and Bureau of Labor Statistics
7-3 Employment by Foreign Own Companies
2003 & 2008
(percentage of total employment)
34
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
Key Findings
• North Carolina continues to be ranked second, behind Virginia, among competitor states in state and local government
funded R&D expenditure.
• North Carolina ranks seventh in the United States for R&D performance in universities and colleges in 2007.
• A total of ten North Carolina counties receive in excess of $1 million in federal R&D contracts from the Department
of Defense.
Indicator Overview
Investments in research and development (R&D) increase productivity, boost economic growth, generate new products
and processes, and improve the quality of people’s lives. High degrees of R&D activity in a state show support for future
growth in knowledge-based industries. Prioritization of R&D among public or private goals can be ascertained when
proportionally compared to the Gross Domestic Product (GDP). The dollars spent on R&D can be examined for various
allocation segments including private industry, federal government, and academic institutions.
How Does North Carolina Perform?
Total North Carolina R&D expenditures continue to rise, growing by more than $2 million from 2006 to 2007. An estimated
75 percent of total North Carolina R&D expenditures were funded by businesses in 2007. The Federal Government was
the second largest supporter of total R&D (20 percent). The Federal Government was also responsible for funding a large
part of university conducted research and development, followed by the institutions themselves. North Carolina, compared
to all competitor states, had the highest amount of university conducted R&D support from businesses (13.6 percent).
Pennsylvania followed, with only 7.5 percent.
How much a state spends on R&D can be greatly affected by the size of their
economy. Consequently, variations in R&D expenditures by state may refl ect
differences in the size of a state’s economy, rather than true efforts in R&D.
To control for this, a ratio between R&D expenditures and state GDP, known as
R&D Intensity, is useful. North Carolina’s R&D intensity is below the national
average of 2.7, but still performs better than 31 states, ranking 19th. The
chart to the right illustrates R&D intensity of comparison states using revised
GDP fi gures from the Bureau of Economic Analysis. R&D is concentrated, with
ten states accounting for 64 percent of total U.S. R&D expenditures in the
top 20 states, including North Carolina, account for an additional 21 percent
or 85 percent of total US R&D. R&D expenditures represent approximately
1.7 percent of the North Carolina’s GDP which is comparable to some of the
benchmark states. Massachusetts, which ranks second to California for all
R&D performance, has a much higher ratio of R&D to GDP at 6.1 percent.31
R&D effectiveness can also be measured by the number of patents awarded in a state. Patents represent a return on
innovation and invention, thus it can be used to gauge successful R&D environments. North Carolina ranks in the middle
of competitor states, ahead of Virginia, South Carolina, Pennsylvania and Georgia in terms of patents awarded per 1,000
individuals in science and engineering occupations in 2008.
31 National Science Foundation, National Center for Science and Engineering Statistics. “Science and Engineering Indicators 2010”. January 2010. http://www.nsf.gov/
statistics/seind10/c4/c4s2.htm#s2
State Intensity
United States 2.7%
Massachusetts 6.9%
Michigan 4.5%
Pennsylvania 2.5%
Virginia 2.4%
North Carolina 2.3%
South Carolina 1.5%
Georgia 1.1%
8-1 R&D Intensity by State
(R&D as a Percent of GDP)
National Science Foundation
35
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
The Federal Government supports research through a number of policy measures, the most direct being the
implementation and funding of R&D that would not otherwise be conducted or fi nanced in the private sector.
The most recent data of federal obligations for R&D in North Carolina shows approximately 52 percent of funding from the
U.S. Department of Health and Human Services [8-2]. In 2007, Health and Human Services obligations were estimated
to make up 70 percent of total federal R&D obligations in North Carolina. The state has considerable obligations from
the Department of Health and Human Services in part because of the quality of academic research institutions in North
Carolina focused on the health sciences and medical fi elds. North Carolina has since expanded its capabilities to include
more defense related R&D. Following Health and Human Services, the Department of Defense, Department of Homeland
Security and the U.S. Agency for International Development make up another 40 percent of federal R&D obligations in
North Carolina.
North Carolina has attempted to attract more Federal R&D contracts from the Department of Defense and the
Department of Homeland Security due to the large and increasing military presence in the State. The top four counties
receiving the highest amounts of defense related R&D funding in 2010 were Wake, Durham, Cumberland, and
Pasquotank [8-3]. Cumberland County includes Fort Bragg, one of the largest military bases in the United States, and
Pasquotank County has a Coast Guard Air Station in Elizabeth City. Both Wake and Durham lack military bases, but
have numerous R&D institutions. Ten counties receive more than one million dollars in defense R&D contracts in North
Carolina. This funding helps support local economies and industries outside of the traditional metropolitan areas.
Other, 4%
Department of
􀁤􆐁􀆌􈰁􀄂􀈁􀅶􇘁􀆐􉀁􀆉􈤁􀅽􇴁􀆌􈰁􀆚􉨁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘃􀍕􅔀􀀃􀌃􀏰􏀄􀐹􃥄
Department of
Homeland Security, 6%
United States Agency for
􀀯􂼁􀅶􇘁􀆚􉨁􀄞􁸁􀆌􈰁􀅶􇘁􀄂􀈁􀆟􉼁􀅽􇴁􀅶􇘁􀄂􀈁􀅯􆼀􀀃􀌀􀀘􁠁􀄞􁸁􀇀􌀁􀄞􁸁􀅯􆼁􀅽􇴁􀆉􈤁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨃􀍕􅔀􀀃􀌃􀏭􎴃􀏯􎼄􀐹􃤀
􀀘􁠁􀄞􁸁􀆉􈤁􀄂􀈁􀆌􈰁􀆚􉨁􀅵􇔁􀄞􁸁􀅶􇘁􀆚􉨀􀀃􀌁􀅽􇴁􀄨􂠀􀀃􀌀􀀘􁠁􀄞􁸁􀄨􂠁􀄞􁸁􀅶􇘁􀆐􉀁􀄞􁸃􀍕􅔀􀀃􀌃􀏮􎸃􀏭􎴄􀐹􃤀􀀃􀍄
Department of Health and
􀀬􂰁􀆵􋔁􀅵􇔁􀄂􀈁􀅶􇘀􀀃􀌁􀆐􉀁􀄞􁸁􀆌􈰁􀇀􌀁􀅝􅴁􀄐􁀁􀄞􁸁􀆐􉀃􀍕􅔀􀀃􀌃􀏱􏄃􀏮􎸄􀐹􃥕
USAspending.gov
8-2 Federal R&D Obligations in North Carolina, by Selected Agency: FY 2010
36
Academic R&D, a critical innovation input and one of the State’s competitive advantages, is highly concentrated in the
Research Triangle region. In 2009, the three largest universities located in the Research Triangle Region – UNC-Chapel
Hill, Duke University, and North Carolina State University – accounted for over $1.8 billion, or 85 percent, in academic
R&D expenditures within the State. These expenditures contributed to North Carolina’s ranking among the top states
in academic R&D. Signifi cant activity also exists at other universities throughout North Carolina, including Wake Forest
University, NC A&T, UNC Charlotte, and East Carolina [8-4].
8-3 Federal Defense Contracts in R&D by County in North Carolina
(Fiscal Year 2010)
USAspending.gov
Duke U.
U. NC Chapel Hill
NC State U.
Wake Forest U.
NC A&T
􀁨􆠃􀍘􅠀􀀃􀌀􀁅􄔀􀀒􁈀􀀃􀌀􀀒􁈁􀅚􅨁􀄂􀈁􀆌􈰁􀅯􆼁􀅽􇴁􀆩􊤁􀄞􁹅
East Carolina U. $24,177
$28,540
$201,204
$380,571
$646,011
$805,021
$24,814
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
National Science Foundation
8-4 R&D Expenditures at North Carolina Academic Institutions, 2009
Map Created in February 2011
50
Miles
R&D Money Amount
Total Amount
0 - 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 - 10,000,000
10,000,001 - 50,000,000
37
The reputation for innovation associated with North Carolina’s universities and colleges is due in part to the fi nancial
support they receive for R&D from state and local governments. Among comparison states, North Carolina ranked second
behind Virginia (11.4 percent) with 10.5 percent of its academic R&D funding coming from state and local governments.
Both North Carolina and Virginia lead competitor states by at least fi ve percentage points in this metric. The North Carolina
General Assembly has a strong tradition of supporting research and development. One of its most recent investments
is the North Carolina Research Campus. Located in Kannapolis, the Research Campus is a public-private partnership
established to advance health and nutrition research. The Federal Government tends to support both private and public
institutions equally, whereas the State Government favors public institutions. Private industries typically support private
institutions’ R&D more than public institutions’ R&D efforts.
What Does this Mean for North Carolina Economic Development?
North Carolina should continue to encourage public-private partnerships to help fuel innovation and balance the benefi ts
and costs of research and development. The State should emphasize the dispersion of technology throughout the
State, such as rural area broadband, to encourage regional knowledge ecosystems, where networks of collaboration are
improved. Universities are likely to remain the center of successful R&D regions. Therefore, North Carolina should also
continue to support universities and develop new learning programs targeted at R&D opportunities, such as defense.
Research universities spark regional economic development through invention, innovation and technology transfer;
thus they create an educated work force ready to meet the demands of an increasingly knowledge based economy.
Additionally, universities themselves and the settings they provide attract smart and talented people to the area.32 R&D,
along with other social, economic, and technological factors, creates new knowledge and contributes to innovation and
the introduction of new goods, services, processes, and managerial practices.33 Continued R&D investment is critical to
North Carolina’s efforts to diversify its industrial base, increase productivity, and attract and retain innovative companies
and talented workers.
32 Anderson Economic Group, LLC. Et al. “Research and Development in the URC” An update to the 2010 Economic Impact Report. December 2010.
http://andersoneconomicgroup.com/Portals/0/upload/AEG_R&DUpdate_PUBLIC.pdf
33 National Science Foundation, National Center for Science and Engineering Statistics. “Science and Engineering Indicators 2010”. January 2010.
http://www.nsf.gov/statistics/seind10/c4/c4s1.htm
INDICATOR 8: RESEARCH AND DEVELOPMENT (R&D)
38
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
Key Findings
• In 2010 North Carolina, unlike the Nation, experienced an increase in venture capital funding.
• Out of total United States venture capital, 20 percent is contributed to the software industry, which is established and
growing in North Carolina compared to the Nation as a whole.34
• Federal funding of the SBIR/STTR Programs decreased substantially from 2009 to 2010 with North Carolina’s share
decreasing from $47 million to $3.5 million.
Indicator Overview
Stimulating entrepreneurial activity is an important and growing focus of economic development efforts throughout the
United States. Venture capital is critical for technology-based start-ups and is most commonly used to stimulate the
fl ow of equity to high-growth industries. The amount of venture capital available to companies is a predictor of potential
new products and services, job creation, and revenue growth in a state. The U.S. Small Business Administration’s Small
Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs require certain federal
agencies to set aside a percentage of their research and development (R&D) budgets for grants to small business. On
average, companies that receive SBIR/STTR funding signifi cantly out-perform similar companies that do not receive such
support.35
How Does North Carolina Perform?
Startup/seed capital is needed to get an entrepreneurial venture off of the ground. Businesses that typically
obtain startup capital are young companies that have not produced a product or service for commercial sale. The
companies are so new it may be diffi cult to obtain a commercial loan suffi cient for covering all related startup expenses.
In North Carolina, 8 percent of all venture capital in 2010 went to startup/seed projects [9-1]. While startup capital is
risky, it is critical for fostering an entrepreneurial environment. Most venture capital is available at the expansion and later
stages of development, which are considered more certain to provide profi ts. In 2010, the dollar value of venture capital
funds in North Carolina was greater in all development stages, except early stage, compared to 2009. Venture capitalists
have shifted investment decisions away from earlier stage ventures towards ventures in the expansion and later stages,
thus reducing risks. Since 2009, there has been a substantial increase in funding for these expansion and later stage
ventures.
34 Hardin, John and Harder, Chris. 2003. Tracking Innovation: North Carolina Innovation Index. North Carolina Board of Science and Technology,
North Carolina Department of Commerce. http://www.ncscitech.com/PDF/reports/ti_2003.pdf
35 BusinessFinance.com. Seed Capital. February 2008. http://www.businessfi nance.com/seed-capital.htm
2010 2009
Startup/Speed
Expansion
Early Stage
Later Stage
Startup/Speed
Expansion
Early Stage
Later Stage
47%
20%
27%
20%
35%
37%
8% 6%
PriceWaterhouseCoopers; National Venture Capital Association
9-1 NC Percent of Venture Capital by Stage of Development
39
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
In 2010, North Carolina businesses attracted approximately $456 million in venture capital funding, down from 2008,
but substantially higher than 2009 ($244 million). North Carolina’s share of national venture capital increased from 1.3
percent in 2009 to 2.1 percent in 2010. For the entire nation, California was the top state to receive funding in 2010 with
50 percent of total U.S. venture-backed investment. This is the third consecutive year California received 50 percent or
more of total U.S. venture-capital. Massachusetts was second, capturing 11 percent of total U.S. dollars. North Carolina
ranks 9th among all fi fty states, trailing competitor states Massachusetts (2nd), and Pennsylvania (7th). North Carolina
did have the highest dollar per deal ratio compared to all comparison states in 2010, with an average investment of $8
million for each deal.
9-2 Venture Capital Funds and Number of Deals, by Select State
State 2010 Venture Capital Investment Number of Deals Dollar per Deal
GA $333,351,000 63 $5,291,286
MA $2,372,657,300 351 $6,759,707
MI $151,558,700 33 $4,592,688
NC $456,256,200 57 $8,004,495
PA $508,438,200 153 $3,323,125
SC $20,715,000 8 $2,589,375
VA $375,436,300 51 $7,361,496
In recent decades, venture capital has played an instrumental role in supporting high-tech, high growth industries such as
information technology.36 Venture capital funding in the fourth quarter of 2010 was most likely to be spent on companies
in the software industry.37 Industrial/Energy 38 and Biotechnology were also highly rated industry options, comprising
about 30 percent of all venture capital investments. These industries are technology dependent and require substantial
capital in order to develop into mature fi rms.
Small businesses, which may not obtain funding through private venture capital, are granted venture funding from the
Federal Government through the SBIR/STTR programs. Despite larger benefi ts to society, small fi rms generally under-invest
in R&D, which is why the SBIR/STTR program goal of increasing R&D funding in small fi rms is valuable.39,40
Nevertheless , a steep decline in program funds occurred nationally as a result of spending cuts by the federal
government. In 2010, North Carolina was granted slightly more than $3.5 million down from $47 million in 2009. All
competitor states faced similar decreasing situations with South Carolina experiencing the largest decrease from the
previous year [9-3]. Prior to 2010, SBIR/STTR funding remained relatively steady across the nation, until sharp program-wide
decreases in 2010.
36 National Venture Capital Association and HIS Global Insight, “Venture Impact, The Economic Importance of Venture Backed Companies to the U.S. Economy.” 2009.
http://www.nvca.org/index.php?option=com_content&view=article&id=255&Itemid=103
37 PricewaterhouseCoopers and National Venture Capital Association, “MoneyTree Report, Q4 2010/Full-year 2010” January 2011.
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/fi lesource/exhibits/MoneyTree_Q42010_Full%20Year.pdf
38 PricewaterhouseCoopers and National Venture Capital Association, “MoneyTree Report, Q4 2010/Full-year 2010” January 2011.
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/fi lesource/exhibits/MoneyTree_Q42010_Full%20Year.pdf
39 Industrial/Energy is defi ned as “Producers and suppliers of energy, chemicals, and materials, industrial automation companies and oil and gas exploration companies.
Also included are environmental, agricultural, transportation, manufacturing, construction and utility-related products and services”.
https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=defi nitions
40 Small fi rms tend to under-invest in R&D because they receive considerably less benefi t (profi ts) than society (new products/services, knowledge externalities, economic
spillovers, etc.). G overnment can counter this by supporting research efforts that promise potential gains for society but are unlikely to yield immediate gains (profi ts) to
the innovating fi rm. Wallsten, S. 2000. “The R&D Boondoggle.” Regulation, Vol. 23, No.4, pp. 12-16. http://www.cato.org/pubs/regulation/regv23n4/wallsten.pdf
PriceWaterhouseCoopers; National Venture Capital Association
40
What Does this Mean for North Carolina Economic Development?
Without venture capital, many innovative companies in North Carolina will not realize their full growth potential.
Venture capital is highly concentrated in two regions in the United States: Silicon Valley and New England (Boston).
More entrepreneurs creating start-ups, sharing knowledge, and attracting venture capital funds exponentially increases
the prospect of North Carolina emerging as a vibrant incubator.41 Given North Carolina’s strength in research at its
universities and in the private sector, an emphasis should be placed on improving venture capital opportunities in the
State, particularly early-stage capital by further linking the private sector with research universities, as university based
research has signifi cant local spillovers. Universities and research institutions create technology transfer of new ideas
between entrepreneurs and encourage growth among start up ventures in new industries.42 More established industries
such as software and biotech continue to require venture capital funds for technological innovation. Given the presence
of these industries in the State, North Carolina has an opportunity in increasing investment and employment in these
industries. The more successful North Carolina continues to be in industries where a mature presence exists, the more
venture capital dollars the State is likely to attract for these industries and for new, emerging industries and fi rms. This
portfolio approach could increase the State’s standing as a venture capital hub over the long-term.
41 In general, entrepreneurs who start companies do not relocate but stay close to the source of their perceived competitive advantage. Feldman,M. 2003.
“The Emergence of Entrepreneurship Policy: Governance, Start-ups, and Growth in the U.S. Knowledge Economy.” Chapter 5, pg. 107. Edited by David Hart, 2003.
Cambridge University Press
42 Jaffe, Adam B. “Univesities and Regional Patterns of Commercial Innovation.” REI Review (1989).
INDICATOR 9: ENTREPRENEURIAL AND SMALL BUSINESS CAPITAL
$0
$50
$100
$150
$200
$250
$300
VA
SC
PA
MI
GA
MA
NC
2005 2006 2007 2008 2009 2010
U.S. Small Business Administration
Millions
9-3 SBIR/STTR Awards by State 2005 - 2010
41
Key Findings
• In 2009, North Carolina was at the national average with 43 percent of the State’s citizens not pursuing formal
education beyond high school.
• Between 2000 and 2009, North Carolina outperformed the national average and benchmark states in reducing the
percent of 25+ population having attained less than a high school graduation or equivalent (-7.0 points). North
Carolina also tied or outperformed all comparison states by increasing the percent of 25+ population having attained a
bachelor’s degree or higher (+2.4 points).
• In the 2008-2009 academic year, North Carolina trailed the national average in the number of graduate degrees
awarded in science and engineering fi elds.
Indicator Overview
Education is a key driver of economic prosperity. Educational attainment measures the highest education level completed
by an area’s population. Higher levels of education tend to lead to higher wages, improve a worker’s ability to adapt
to changing economic conditions and utilize new technologies, and are increasingly a prerequisite for employment in
knowledge-based industries.
How Does North Carolina Perform?
Overall, North Carolina is comparatively less educated than the nation as a whole and many benchmark states. In 2009,
the State trailed or tied national averages in all educational attainment categories except for Associate’s Degrees and
Some College/No Degree [10-1]. In addition, North Carolina trailed all benchmark states except for South Carolina for the
percent of population over twenty-fi ve years of age having attained a graduate degree. Only Georgia and South Carolina
had more people with less than a high school diploma or equivalent.
10-1 Educational Attainment by Degree Category, 2009
(Percent persons 25 years and older)
US NC GA MA MI PA SC VA
Less than a High School
Graduation or Equivalent
14.8% 15.6% 16.1% 11.1% 12.1% 13.2% 16.4% 13.4%
High School Graduation or
Equivalent
28.5% 27.3% 28.9% 26.3% 31.1% 37.7% 30.3% 25.4%
Associate’s Degree 7.5% 8.5% 6.4% 7.7% 8.2% 7.3% 8.4% 6.6%
Some College, No Degree 21.3% 22.0% 21.0% 16.7% 24.1% 16.6% 20.6% 20.6%
Bachelor’s Degree 17.6% 17.7% 17.6% 21.8% 15.2% 16.2% 15.9% 19.9%
Graduate or Professional
Degree(s)
10.3% 8.8% 9.9% 16.4% 9.4% 10.2% 8.4% 14.1%
However, North Carolina ranks high for improving educational attainment in two important categories. The State reduced
the percent of the 25+ population having attained less than a high school graduation or equivalent, from 22.6 percent
in 2000, to 15.6 percent in 2009, a decrease of 7.0 percentage points. Comparatively, the nation as a whole reduced
the percent of the 25+ population with less than a high school degree or equivalent by 3.7 percentage points over the
same period. Also, North Carolina increased the number of the 25+ population with a bachelor’s degree by 38 percent,
equating to 300,522 more bachelor’s degrees in 2009 than in 2000 and a 57 percent increase in graduate and
professional degrees (+196,118) [10-2]. During the same period, the United States increased educational attainment for
the 25+ population with a bachelor’s degree or higher by 35 percent.
INDICATOR 10: EDUCATIONAL ATTAINMENT
U.S. Census Bureau
42
Science and engineering education is an important indicator for economic development because the skills associated with
their education are needed in knowledge-based jobs. During the 2008-2009 academic year, North Carolina’s performance
was mixed. The State produced 18.7 science and engineering bachelor’s degrees and 2.8 science and engineering
master’s and doctorate degrees per 10,000 population [10-3]. North Carolina ranked higher than Georgia, Michigan,
South Carolina and the United States for awarded science and engineering bachelor’s degrees. However, the State trailed
all comparison states except for South Carolina and Georgia in terms of awarded master’s and doctorate degrees.
INDICATOR 10: EDUCATIONAL ATTAINMENT
0
10
20
30
40
50
60
US NC GA MA MI PA SC VA
25%
30%
38%
57%
43%
57%
15%
22%
11%
18%
18%
29%
19%
38%
24%
37% Bachelor’s Degree Graduate or Professional Degree
Integrated Postsecondary Education Data System, National Center for Education Statistics
10-2 Percent Change in Educational Attainment, 2000 - 2009
43
What Does this Mean for North Carolina Economic Development?
The growth of North Carolina’s economy is predicated on the capabilities of its workforce, and educational attainment is
a fundamental way of measuring those capabilities. North Carolina’s educational attainment levels, including conferred
science and engineering degrees, rank below the national fi gures and key benchmark states. This means North Carolina
employers could face challenges fi nding and hiring a highly educated workforce, particularly workers necessary for
knowledge-based industries. However, North Carolina’s documented progress suggests the State’s labor force is improving
more rapidly than the Nation as a whole and most benchmark states in many categories. Employers seek locations
producing and attracting a highly educated workforce. Continuing to target investment in education will enable North
Carolina’s population to move up the educational attainment ladder and continue to attract a workforce employers seek.
INDICATOR 10: EDUCATIONAL ATTAINMENT
Science & Engineering Bachelor’s Degrees
Science & Engineering Master’s and Doctorate Degrees
0
5
10
15
20
25
30
10.4
3.2
18.7
2.8
9.9
2.3
26.1
5.7
17.3
3.6
19.5
3.5
12.3
1.9
19.7
4.4
US NC GA MA MI PA SC VA
Integrated Postsecondary Education Data System, National Center for Education Statistics
10-3 Science & Engineering Degrees per 10,000 Population
2008 - 2009
44
INDICATOR 11: STATE GROSS DOMESTIC PRODUCT
Key Findings
• Between 2004 and 2009, North Carolina’s Real Gross Domestic Product (GDP) grew by 7.3 percent, greater than the
U.S. average and fi ve of the six comparison states.
• However, since the start of the recession (2007) Real GDP has fallen 4.5 percent.
• In 2009, North Carolina’s per capita real GDP was $38,847, slightly below the national per capita real GDP.
• In 2009, the Government was the leading contributor to the State’s GDP and replaced nondurable goods
manufacturing, which had been the leading contributor to the State’s GDP in 2007.
Indicator Overview
One of the most common ways to measure a state’s overall economic performance or strength is to look at state
gross domestic product (State GDP). The U.S. Bureau of Economic Analysis (BEA) defi nes GDP as a measurement
of a state’s output – the value added in production by the labor and property located in the state. State GDP is the
monetary value of all goods and services performed in a state in one year.
How Does North Carolina Perform?
In the years before the recession the State experienced signifi cant economic growth. In 2004, North Carolina’s Real GDP43
was $335.9 billion. Real GDP peaked in 2007 at $377.6 billion before declining to $360.5 billion in 2009. Despite the
decrease from 2007 to 2009 the State’s Real GDP grew by 7.3 percent from 2004 to 2009, greater than the U.S. average
of 4.7 percent and faster than all comparison states [11-1] except Virginia.
43 “Real” GDP is Gross Domestic Product adjusted for infl ation; stated in terms of a base year (2005).
8.0%
5.0%
2.0%
-1.0%
-4.0%
-7.0%
-10.0%
-13.0% US NC GA MA MI PA SC VA
Real GDP Real GDP Per Capita
4.7%
-0.1%
7.3%
-2.4%
1.0%
3.2%
0.9%
-12.4%
-11.3%
2.7%
0.9%
1.1%
-6.9%
8.0%
2.4%
-8.4%
U.S. Bureau of Economic Analysis
11-1 Percent Change in Real GDP and Real GDP Per Capita
2004 - 2009
45
11-2 Per Capita Real GDP, 2004 & 2009
(2005 dollars)
INDICATOR 11: STATE GROSS DOMESTIC PRODUCT
Per capita Real GDP by state is an important measure of prosperity for an area. It is calculated by dividing the Real GDP
of the state by the state’s population. In 2009, North Carolina’s per capita Real GDP was $38,437, down from $39,384
in 2004 [11-2]. The State’s per capita Real GDP was slightly less than the United States ($41,632) and signifi cantly less
than Massachusetts ($50,023) and Virginia ($46,609). During the same period(2004 to 2009) North Carolina’s per
capita Real GDP growth rate was -2.4 percent and behind the national average of -0.1 percent. It’s interesting to note
North Carolina’s Real GDP increased more than all but one benchmark state between 2004 and 2009, while Real GDP
per capita decreased faster than all but one benchmark state over the same period. This is a result of North Carolina’s
population increasing more rapidly than Real GDP. Even still, North Carolina had a smaller decline in Real GDP Per Capita
than South Carolina, Georgia, and Michigan over the 5 year period.
Government in North Carolina was the largest contributor to GDP over the course of the recession. In 2009, North Carolina
government accounted for 14.3 percent of the total State GDP, up from 12.9 percent in 2007. The fi nance and insurance
industry was also a major contributor to State GDP at 11.6 percent, up from 10.2 percent in 2007 [11-3]. Real estate and
nondurable goods manufacturing continued to be important industries for North Carolina, with both contributing over 10
percent to State GDP. Since 2004 the fi nance and insurance industry has seen the largest percentage point increase in its
contribution to State GDP. Finance and insurance’s portion of State GDP increased 1.3 percentage points from 2004
to 2009.
0
10000
20000
30000
40000
50000
60000
US NC GA MA MI PA SC VA
2004 2009
$41,675
$41,632
$39,384
$38,437
$39,577
$36,252
$49,560
$50,023
$37,040
$32,839
$38,687
$39,033
$33,128
$30,845
$45,538
$46,609
U.S. Bureau of Economic Analysis
46
2-Digit NAICS Industry 2009 % of State GDP 2007 % of State GDP 5 Year Trend 2004 to 2009
Government 14.3% 12.9% Increase
Finance and insurance 11.6% 10.2% Increase
Real estate and rental and leasing 10.5% 9.7% Increase
Nondurable goods manufacturing 10.1% 13.0% Decrease
Durable goods manufacturing 8.0% 8.7% Increase
Health care and social assistance 6.8% 6.2% Increase
Wholesale trade 6.0% 5.5% Increase
Retail trade 5.7% 6.0% Decrease
Profes